Commitment and the gym

Everyone I know says they want to spend more time at the gym – myself included.  However, as an economist I’ve learnt to look past what people say and look at what they actually do.  In essence, people really just wish that a previous version of themselves (them in the past) had gone to the gym and got in shape – and that they could reap the fruits of this labour now.

However, this is not the whole story.  We know that people are present biased, or that the discount hyperbolically.  Given this, people genuinely do wish they could go to the gym more in terms of maximising their lifetime happiness – but they can’t force the current version of themselves to get around to doing it.

That is where the genius of this gym comes in (ht Marginal Revolution).  By charging people more if they don’t work out, the gym makes it more costly to not work out – if the cost is large enough, people will then go and work out.  As a result, an individual can join this gym and commit to working out – as if they don’t they have to bear this cost (other examples: *,*,*,*,*,*,*,*).

Now usually, adding a cost is a bad thing – but in this case, if the pre-commitment is working, the cost is never realised.  There are two ways to think about this to make it easier:

  1. The current version of yourself is putting a negative externality on the future version of yourself (which is not fully internalised because of you present bias) – by putting in this charge you are forcing the current version of yourself to internalise the externality, and as a result this changes behaviour.
  2. Over time there are a set of actions that will make you happiest – however, at a given point in time you can’t commit to doing the action that will cause this (because of your present bias).  By imposing a cost on doing the “wrong” action you can shift your own choices towards the “correct” action.

When it comes to pre-commitment and the ilk I love the idea of voluntary pre-commitment devices, that people can choose to opt into.  The more business gets involved with this, and the more government supports the institutional arrangements that allow this, the better.

However, remember that having a pre-commitment mechanism that people can opt into is very different to “forcing” people to do something.

In the gym example, we could “solve” the “problem” of people not going to the gym by forcing them too – we could even use “evidence” by basing the amount we force people to go on surveys.  However, such a “solution” is forced on a myriad of different people who would make different choices.  Furthermore, as we said at the start, some people will just say they want to go more – when in reality they don’t, they just wish that a the previous version of themselves had done it so they could free-ride on the fitness (which is a durable good).

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  • So it’s good when people individually opt to precommit but not good when people collectively opt to precommit?! I understand the costs due to heterogeneity but that doesn’t prevent it being a second best solution.

  • @rauparaha

    I have no doubt there is a very specific situation where it will be a second-best solution – and of course I will give you that point.

    However, I am of the opinion that, in general, there is a superior “second-best” solution in so far as the government can make a institution, or opt-in contract, which will allow people to choose commitment individually – thereby making use of revealed preferences.

    In many ways it is similar to the reason why we choose externality taxes above direct regulation – unless the cost of said tax (commitment mechanism) is very large, it remains superior to direct regulation.

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  • raf

    So how about paying girls under the age of 20 not to get pregnant? $500 a year. And we shouldn’t leave the boys out either. Same for them not to impregnate.

  • JiveKitty

    raf, yours is an opposite scenario:

    End result in this case is the action the individual directly controls – going to the gym and working out (single party); pregnancy is the indirect result of actions the individuals involved directly control (multi party).

    Paying someone not to get pregnant or not to impregnate is not the same as penalising somebody for not doing something – in this case, going to the gym and working out. As such, the mechanism is very different to that of a penalising one which is 1) freely chosen and 2) the result of the individual considering the choice in the context of the medium to long term. Sex, on the other hand, which is a necessary – although insufficient – condition for unplanned pregnancy, is often considered in the context of the short-term, particularly for youth and particularly given the biological processes which take place around the time of such a decision (poor calculation of probabilities in terms of long term outcomes, lowered inhibitions, etc). As such, this, as well as getting pregnant/impregnating somebody being an indirect result, means it’s signifcantly harder to control in terms of outcome even were payment a particularly viable incentive tool (As well as this, unlike the above gym and workout situation, if one sees the rate of pregnancy and impregnation in and by those under twenty as overly high and problematic, a conclusion could be that the negatives of pregnancy don’t even seem effective as penalising factors, but that possibly speaks to the mindset when the decision is made).

  • DT

    Good post Matt.

    I can’t remember my logic now, but I always thought that it would be interesting to compare the second hand market for gym memberships (ie via trademe) to compare those gym membershups that are transferrable vs. those that are not would be an interesting way to measure this phenomenon. As I say, I forget exactly how I thought this would work but am confident that it would be an interesting quantifiable avenue for research.

  • Joined a gym many times so far in my life.. Stopped and started.. best thing was when I looked in the mirror with no clothes on.. Should be compulsory for all those who need some commitment
    Steel Juicer

  • DT’s post made me take notice, do you guys trade or split your gym memberships over in NZ? They are pretty tight and stringent with any kind of ‘sharing’ of your gym membership here in the UK, for the amount you get ripped off by you’d think we’d have taken more of a stand against it!! :\

    M

  • DT’s post made me take notice, do you guys trade or split your gym memberships over in NZ? They are pretty tight and stringent with any kind of ‘sharing’ of your gym membership here in the UK, for the amount you get ripped off by you’d think we’d have taken more of a stand against it!! :\

    MK