The New England Journal of Medicine is reporting the results of a study of General Electric employees who wanted to quit smoking. Those who were offered a phased in reward of $750 were three times as likely to have been successful a year later as those who were in other treatment plans (15% vs. 5%; for details, see this, h/t Alex Tabarrok).
GE will launch a similar scheme in 2010 for all US employees, believing it will be cost-effective in the long term.
I'm guessing that the net effect of the second round of this plan will not be nearly so successful as the first round. If I worked at GE, or if my employer announced it was going to institute such a plan in one year, I might be tempted to take up smoking again just so I could quit and collect the bonus. And if I were a smoker who was planning to quit today, I might be tempted to wait a year to try to become a part of the programme.
I realize that $750 is not all that much, compared with the cost of buying cigarettes. But if it is enough to induce people to quit smoking, I would be very surprised if it were not enough to induce some people to keep smoking, too.
In general, schemes that pay people to stop doing things work in the short term, but in the longer term, if people expect the schemes to remain in place, all they do is induce more people to do the thing the scheme is designed to stop, just so they can collect a payment.
GE's announcement will provide a good test. I hope they collect data on how many people took up smoking so they could join the plan. I also hope they have a good data set on how many of their employees are and have been smokers for the past decade or so; longitudinal data would be preferable, of course. I would expect a decline in the number of quitters between now and then, relative to the number who might otherwise have quit. Alternatively, I hope they just ask how many didn't quit between now and then, hoping and expecting to become part of the programme.
Many economists will tout this programme, saying "See? People respond to incentives!" An important question, though, is what are the overall incentives created, and how are people responding to this overall set of incentives?
From Robbie Burns,
The best-laid schemes o' mice an 'men
Gang aft agley