If your employer offered you $550 (Dh2,024) to lose weight, an amount that would be deducted from your health insurance premiums next year, would that provide the motivation to help you finally shed those pounds?

Roughly four out of five large employers in the US now offer some sort of financial incentive to employees to improve their health. The Affordable Care Act has encouraged the creation of such programmes by significantly increasing the amount of money, in the form of a percentage of insurance premiums, that employers can reward (or take away) to improve factors such as body mass index, blood pressure and cholesterol, as well as for ending tobacco use.

These programmes make intuitive sense. But do they work?

We and several colleagues recently conducted a yearlong trial to test whether the promise of $550 off next year’s health insurance premium, paid out over the course of that year, could motivate employees to lose weight. After one year, as we recently reported in the journal Health Affairs, employees randomly assigned to a control group that received no financial incentive had no change in their weight. But employees who were offered a $550 premium reduction didn’t lose weight either.

One reason that these rewards were ineffective was that they were provided too far in the future. If you lose weight today you may not receive any reward until next year. Next year is a long way off, particularly if there is a cookie in front of you right now.A second reason was that while a premium discount of $550 sounds motivating, it is only about $20 per biweekly paycheque. What’s more, that $20 is typically deposited directly into a bank account that you may never review carefully, and even if you did, is bundled with your total paycheque and the total funds in your account. A delayed incentive broken up into small increments and directly deposited among much larger amounts of money is not likely to overcome the forces that have always made losing weight hard.

This doesn’t mean that workplace financial incentives to promote health can’t be effective. But it does suggest that adjusting people’s health insurance premiums is not a good way to motivate them to lose weight. Such incentives need to be designed better.

Financial incentives can work well — if they are separated from insurance premiums. In recent years, we’ve studied other weight-loss interventions in employees, using similar amounts of money, that did work. In a study published in 2013 in The Annals of Internal Medicine, we found that you can encourage weight loss if you put employees in groups in which only those who succeed in achieving a monthly weight-loss goal get rewarded. This works, probably because people hate the idea of seeing others in the group collect a prize that might have gone to them if only they had tried a little harder.

Another example: Two of us (Asch and Volpp) and colleagues conducted two large studies, one at General Electric and another at CVS, published in The New England Journal of Medicine in 2009 and 2015, respectively. Both studies found that participants who received cash or cheques of $750 to $800 over the year quit smoking at triple the rate of a control group.

And last month, we published a study online in The Annals of Internal Medicine that tested ways to encourage employees to be more physically active. A group of 281 employees were given a goal of taking at least 7,000 steps a day, measured using the accelerometers in their smartphones. By random allocation, some employees were assigned to the control group and were just given feedback about their step counts. Another group could earn $1.40 every day the 7,000-step target was reached — that’s $42 per month. Those in a third group were told that each month they would start with $42 in an account and $1.40 would be taken away every day they didn’t meet the goal (though no participant could end up worse off financially than when he started).

From a purely economic standpoint, the motivation for these last two groups ought to be the same: In each case at the end of the month you are $1.40 richer for each day you walked at least 7,000 steps. But from the standpoint of human psychology, there’s an important difference, for as much as people like to earn $1.40, they really hate to lose $1.40 — a phenomenon known as “loss aversion”.

We ran the study for three months, and even with regular feedback, employees in the control group achieved the step goal only 30 per cent of the time. Employees who earned $1.40 for every day they met their goal achieved the step goal 35 per cent of the time — a figure statistically no different from that of the control group. By contrast, those who stood to lose $1.40 for every day they didn’t meet their goal achieved that goal 45 per cent of the time.

As all these studies suggest, companies can improve the health of workers, but only if they are smart about it.

Mitesh S. Patel, David A. Asch and Kevin G. Volpp are professors at the Perelman School of Medicine and the Wharton School at the University of Pennsylvania, and staff physicians at the Cpl. Michael J. Crescenz Veterans Affairs Medical Center in Philadelphia.