Economics of losing weight and other New Year’s Resolutions

Economics of losing weight and other New Year’s Resolutions

One of the most popular New Year’s Resolutions is losing weight. While some would like to shed off the few extra pounds gained during the holiday season, obesity is an increasing issue throughout the world. According to the World Health Organization, more than 2.1 billion people, nearly a third of the global population, are obese.

McKinsey Global Institute has calculated, in a study published in November, that “obesity is responsible for about 5 percent of all deaths a year worldwide, and its global economic impact amounts to roughly $2 trillion annually, or 2.8 percent of global GDP – nearly equivalent to the global impact of smoking or of armed violence, war and terrorism.”

Yet the European Court of Justice, the EU’s highest court, recently ruled that while not a disability in itself, obesity could be considered one if it caused physical, mental or psychological problems that hindered a person from doing work in the same way as her colleagues. As an economist, I feel that giving people legal grounds to feel righteous about their obesity is actually a disincentive for losing weight.

In the U.S., obesity affects one-third of Americans and costs companies $73 billion a year, according to researchers from Duke University. Firms have already moved beyond standard approaches, such as vending machines offering healthy food and subsidies on gym memberships, and are now after more innovative solutions. While some are handing out fitness trackers, others are covering weight-loss surgeries and drugs, as well as counseling.

But if you are working in Turkey, chances are that your company does not offer any of these, so you have to take matters into your own hands. You can start by joining a gym and changing your eating habits. However, this is more easily said than done. As Homer (Simpson, not the Greek) often points out, healthy food does not taste good. And in a paper published in the prestigious American Economic Review in 2006, Stefano DellaVigna and Ulrike Malmendier showed that many people do not attend gyms much after signing up.

Luckily, economics offers a solution. Actually, it was Odysseus who used a “pre-commitment mechanism” first – when he tied himself to the mast of his ship to prevent the sirens from luring him.

StickK, a company founded by two Yale University economists in 2007, sets up similar commitment contracts. If you cannot reach your goals in the allotted time, the company makes a predefined payment to a charity – even one you dislike for added incentive.

According to a recent Harvard Business Review case study, the success rate for contracts without financial penalties is 42.7 percent. When there is money involved, the success rate surges to 82.8 percent, and if the money is going to a charity the user does not like, it is even higher, 87.1 percent.

You can design a similar mechanism yourself: I just signed up to a gym and handed over the cost of the six-month membership to a friend. If I haven’t lost 25 pounds by the end of June, he’ll donate my money to the Justice and Development Party (AKP) or football club Galatasaray. Now, I call that real motivation!