Friday, April 9, 2010

Paying (Twice?) Not to Go To the Gym

People join health clubs with the intent of heading there frequently. Alas, many find that they do not go as often as planned, and that they would have been better off not to join, but to purchase a ten-visit pass (or a series of such passes) instead. Further, people maintain their health club memberships for a month or two after they stop going to the gym at all.

I am drawing these claims from an article by Stefano DellaVigna and Ulrike Malmendier entitled "Paying Not to Go to the Gym" (ungated version, 35-page pdf, here).

A friend of Self-Exclusion notes the policies of her health club. This club offers classes, for which participants are asked to pre-register. (The most popular classes can fill up quickly, especially those classes conducted on Fridays and Saturdays.) One strategy might be to sign up for a bunch of classes as soon as registration is open, but a system of penalties for missed classes or late cancellations makes that strategy untenable. If you miss a class for which you are pre-registered, you will have to pay a fine or lose your right to pre-register. Cancelling a pre-registration without penalty is allowed, as long as it occurs two hours or more before the class -- 24-hours or more for those busy Friday and Saturday classes. (Apparently one ploy for getting into a popular class is to try to register exactly two hours before the class, as some people will have just cancelled.) If you are more than ten minutes late for a class you will not be allowed to take part, and you are fined as if you had not shown up at all.

Our informant indicates that the cancellation policy has proven very effective in motivating class attendance. But for wildly optimistic folks, those who do not understand the extent of their own self-control problems, the cancellation policy presents the possibility of paying twice not to go to the gym: once for an underused membership, and a second time for missed classes.

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