Penalties pay off for New Year’s resolutions





Karlan then turned to other areas in which people lack self-control. He found that when people want to quit smoking, they are more likely to succeed if they arrange to lose money should they fail. In a randomized trial, 30 percent of those who risked a penalty for failure achieved their goal, compared to only 5 percent in the control group.

Karlan discussed his work with colleagues at Yale. How, they asked themselves, can we give people stronger incentives to keep their resolutions and achieve their personal goals? You can find their answer at a website they helped to start, www.stickK.com., where you can make a Commitment Contract, which obliges you to reach a goal of your own choosing. Then, as an incentive to fulfill your commitment, you can decide on a penalty that you must pay if you fail.

For example, one way of giving yourself a strong incentive to reach your goal is to commit to pay money to someone if you fail. Better yet, you can specify that you will have to pay a certain sum to a cause that you detest. If you support protection of the world’s rain forests, you could decide that your penalty payment will go to an organization that favors commercial development of the Amazon.

In addition, the website makes the commitment public, and allows you to have supporters who will encourage you to meet your goal, and whom you will disappoint if you fail. So far, 45,000 people have used stickK to make Commitment Contracts, with a success rate, for those who give themselves a financial incentive, above 70 percent.

Karlan’s research, and the results obtained at stickK, suggests that most people, when they are thinking calmly, have a sense of what is in their interests, but, faced with more immediate temptations, are often unable to keep to their plans. For example, the wide availability of electronic gaming machines and online gambling makes it difficult for “problem gamblers” to stop gambling, even though they know that they are losing more than they can afford to lose. As a result, many ruin themselves financially, causing great distress to their families. Some stoop to crime to pay their gambling debts. Could a commitment contract help problem gamblers to stop?

For the past two years, almost all gambling in Norway has required the use of an electronic card. Cash is forbidden. The card allows the government to impose daily and monthly limits on the amount players can lose on electronic gaming machines. This approach appears paternalistic, and perhaps it is, but it could also be defended in terms of preventing people from making their children destitute, and becoming — in a country like Norway, which provides for its poor — a burden on the state.


The idea of offering gamblers a chance to set their own limits before they begin a gambling session is beginning to spread around the world. In addition to Norway, it exists, in various forms, in Sweden, New Zealand and the Canadian province of Nova Scotia.

Australia’s Productivity Commission recently studied the value of such pre-commitment systems. It estimated the annual social cost of problem gambling in Australia at $4.7 billion, and recommended that voluntary pre-commitment systems be phased in for electronic gaming machines. The government, under pressure from an independent member of parliament on whose support it relies, has now promised to implement the commission’s main recommendations.


Peter Singer is a professor of bioethics at Princeton University and a laureate professor at the University of Melbourne. His most recent book is “The Life You Can Save.” © 2011 Project Syndicate