How Economists Lose Weight

Put a contract out on yourself -- if you don't lose weight, you lose the money. Does it work? Read and find out:

A Yale economics professor and a Yale law school professor are hoping that the next diet trend to take off is their own, which involves getting dieters to sign binding contracts committing to pay significant sums of money if they fail to meet their weight-loss goals.

The economist, Dean Karlan, tested the method himself, promising to hand over $1,000 to a friend every week that he didn't drop one pound. Soon enough, he lost 10 pounds, getting down to 170 pounds without paying a cent.

Now, Mr. Karlan and Ian Ayres, the law professor who also teaches at Yale's school of management, are launching a company based on this strategy. StickK will officially open next month, just in time for New Years' resolutions aimed at losing pounds gained at holiday parties and family feasts. The company will have a Web site offering individuals hoping to reach a goal — anything from sticking to a diet to learning to ride a unicycle — legally binding contracts where they will pay a set dollar amount to charity if they fail in their endeavor.

In December, customers will be able to decide on an amount to put up as collateral if they fail in their goals, and will give StickK their credit card numbers, which will be charged if they miss their objectives. There will also be a verification system, such as a designated friend or gym that will chart customers' progress.

Mr. Harford explains the effectiveness of the contracts in psychological terms. "There are two parts of me," he says. "There's a short-term self who thinks, 'I really can't be bothered to do those push-ups right now… I'll just do it later.' And of course later never comes. Then there's the long-term self who says, 'Look, this is not a big deal; it's not much of a hassle. You'd actually like to be fitter and stronger, and have better pecs so you should do this.'" Mr. Harford sees the StickK contract as a way of helping the long-term self beat the short-term self. "And it works," he says.

Read the whole thing. I wonder how well this would work to motivate me to do my homework?

Ian Ayres is the co-author of Why Not?: How to Use Everyday Ingenuity to Solve Problems Big And Small, a book that has been sitting unread on my bookshelf for far too long. Ayres also wrote Super Crunchers: Why Thinking-by-Numbers Is the New Way to Be Smart, which has been getting a lot of press recently. He and Russ Roberts had an excellent podcast on this book several weeks ago.

(HT Tyler Cowen)