November 13, 2007
You bet! My commitment bond adventure
I’ve written before about making some kind of financial commitment in an effort to fight weak will. Thomas Schelling would approve, I am sure.
But now lawyer-author-economist Ian Ayres (his new book, "Supercrunchers", is great fun) is setting up a company to supervise commitment bonds: you make a contract with them that you’ll lose weight / give up smoking / do something else. You deposit the cash with them. If you don’t fulfill your resolution, you lose.
I couldn’t pass up the chance to be the first customer. $1000 is now riding - $100 per week, a week at a time - on my ability to do a weekly quota of push-ups and sit-ups. (I’ve got to be buff for the book tour in January.)
I shall write a column in December or January about the glowing success of this economic incentive - I hope.
I was going to keep quiet about this, but Greg Mankiw, The Economist, Bryan Caplan and the Washington Post are all on the case. But will any of them have pecs of steel by Christmas Day?
Just a note that this is not an “economic incentive,” it’s a “monetary incentive.”
Economics is not only money, and insofar as this scheme works it proves that also money is not only economics. Psychology can suggest why monetary outcomes are more salient than equivalent non-monetary outcomes. Economics has to be split in half to cope with people making different decisions when given the exact same outcomes, only presented differently.
Posted by: Tom C | November 13th, 2007 at 8:36 pm | Report this comment“I couldn’t pass up the chance to be the first customer.”
Not fair. The website isn’t officially launched yet. Are they already taking contracts?
Posted by: Biomed Tim | November 13th, 2007 at 11:26 pm | Report this commentRelying on your own report would obviously defeat the purpose of the bond, so how does this company plan to keep track of your weekly pushups.
Posted by: Spencer | November 14th, 2007 at 3:01 am | Report this commentTom C: If you blog about it, then yes we will take the contract now! Seriously, email me, we’ll make sure you on the closed beta, launching very shortly. Full site up for the public by New Year’s. — Dean Karlan
Posted by: Dean Karlan | November 16th, 2007 at 12:31 pm | Report this commentI’m currently doing a diet under a similar plan, but with a difference: a friend is holding a check for $250 made out to the Guiliani campaign. If I don’t succeed, the check gets mailed. Not only do I lose my money, but it will be public record that I supported him.
Substitute whatever politician provides the best motivation for you.
Note that trying to “escape the contract” by donating to the “opposite” candidate probably does not work very well.
Posted by: Mark | November 20th, 2007 at 4:20 am | Report this comment