How financial incentives were x3 more likely to make employees quit smoking

General Electric: A major American corporation and one of the most-diversified corporations in the world. General Electric’s products include electrical and electronic equipment, aircraft engines, and financial services.

Nudges: Techniques to change people’s behaviors in predictable ways without forbidding any options or significantly changing economic incentives.

Financial incentives: A specific type of nudge, financial incentives entail offering monetary benefits to motivate certain behaviors.

Smoking as a health problem

Smoking is the leading preventable cause of premature death in the United States.¹ Among those who smoke, 70% report a desire to quit, but the annual success rate is only 2% to 3%. 

Smoking in the workplace

Employers will benefit financially if their employees stop smoking, since increased productivity, decreased absences, and reduced incidences of illness can amount to an annual gain of $3,400. Although there is evidence that people prefer to work for companies that offer attractive benefit programs, few offer full coverage of smoking cessation services. As a result, smoking – and especially employee smoking behavior – is an important issue to address.

Can financial incentives have long-term impacts?

Prior studies have shown that providing smokers with financial incentives increases enrollment in smoking discontinuance programs and short-term cessation rates, but have not found significant increases for long-term cessation, regardless of whether studies are applied to work settings or not.¹ However, in order to see success in preventing health issues as well as increased work productivity, long-term behavioral change is the goal.

Employers are incentivized to encourage cessation

Up until General Electric’s experiment, financial incentives related to health care were primarily directed toward health care providers.¹ Since 40% of premature deaths in the United States are due to unhealthy behaviors like smoking or poor dietary habits, incentives directed toward patients have greater potential to change health behaviors. Work sites are especially promising for encouraging smoking cessation since employers are also motivated to decrease employee smoking, with the hope for increased productivity and decreased health coverage in exchange. In other words, employers are loss averse: they want to promote behaviors that will help them avoid losses (i.e. productivity and health coverage).

Participants: Smokers at General Electric

The researchers at General Electric used a controlled experimental manipulation to test their intervention.¹ Participants were employees under the corporation and were recruited to the study on the basis of their smoking habits and the assurance that they did not use any tobacco products other than cigarettes. 

Bigger incentives; bigger sample size

The researchers drew from the design flaws of prior studies that used financial incentives to promote smoking cessation by ensuring that their incentives had greater value and that they used larger sample sizes.¹ They randomly assigned 878 employees to two conditions: 442 employees were only given information about smoking cessation programs, while 436 employees were given information about smoking cessation programs and provided financial incentives.

The financial incentives

• $100 for completing a community-based smoking cessation program;
• $250 for actual smoking cessation within 6 months after participants enrolled in the study, which was confirmed with a biochemical test; and,
• $400 for abstinence from smoking for another 6 months from the original cessation, which was also confirmed with a biochemical test.

All participants were followed for at least 12 months, regardless of the experimental group they were assigned to. Those who received negative results from the biochemical test were followed for an additional 6 months to track cessation.

The 4E framework

The use of financial incentives to motivate smoking cessation exemplifies the 4E framework, a behavioral change approach that seeks to encourage specific behaviors through increased access to services, incentives, information, and social networks.² 4E interventions enable, encourage, engage, or exemplify target behaviors: 

• Enable: General Electric provided its employees with access to services that enabled the health change behavior that was desired. Providing both information about community-based smoking cessation programs and financial incentives to participate allowed any willing employees to participate in smoking cessation.
• Encourage: The driving force behind General Electric’s experiment was a curiosity to explore whether larger financial incentives would nudge employees toward smoking cessation. Indeed, the researchers found that their tiered incentives were effective for encouraging cessation.
• Engage: By encouraging employees to enrol in a community-based smoking cessation program, General Electric encouraged their employees to join a social network to engage them in smoking cessation. When surrounded by like-minded people who also wanted to change their smoking habits, employees were engaged in the health change process.
• Exemplify: General Electric demonstrated a commitment to helping their employees decrease smoking rates by maintaining commitment to their follow-up checks and associated incentives. By carrying out the experiment and indicating an interest to build incentivized cessation into their benefit program, General Electric exemplified their desired behavior.

Triple the cessation rate

The researchers found that the incentivized group had significantly higher rates of smoking cessation (14.7%) compared to the information-only group (5%). The fact that the intervention was three times more effective is significant on its own, but employees from the incentivized group also had significantly higher rates of discontinuance than the information-only group six months after their original cessation, at 9.4% and 3.6%, respectively.

Higher community program enrolment

Incentivized participants also had significantly higher rates of enrollment in a community-based smoking cessation program when compared to participants from the information-only group (15.4% compared to 5.4%), higher rates of completing the cessation program (10.8% compared to 2.5%), and higher rates of smoking discontinuance within the first 6 months after enrolling in the study (20.9% compared to 11.8%).

The program’s expansion

Based on the strength of the researchers’ experimental findings, General Electric now offers these incentivized smoking cessation programs for their 152,000 employees.¹

Beyond General Electric

The study shows that rates of smoking cessation among company employees will be significantly higher when employees are not only provided information about discontinuation  programs, but also when they receive financial incentives.¹ Companies should consider the exchange of employee incentives with possible net gains from increased productivity and decreased absenteeism. If similar programs can be adapted, both corporations and individual health in the United States may improve.

• The study greatly improved the outcomes of the participants involved.
• The participant’s information was kept totally anonymous.
• The intervention respected participants’ abilities to make decisions while broadening their choice sets.

Why do we rely on our current emotions when making quick decisions?

The affect heuristic highlights how we rely on our emotions during decision making, which can result in quick conclusions without much thought. While the affect heuristic can lead to negative impulsive decisions, health campaigns can also capitalize on this heuristic to deter people from smoking. Take a look at this article to find out how fear can drive smoking cessation. 

Why do we value immediate rewards more than long-term rewards?

If smoking has such bad consequences for our health and productivity levels, why do people smoke in the first place? Hyperbolic discounting might be one of the culprits: humans tend to choose immediate rewards (the dopamine hit that comes from smoking) over rewards that will occur in the future (improved well being that comes from smoking cessation), even when the immediate rewards are smaller. Check out this piece for more information on hyperbolic discounting and how we can combat it.