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pretty guilty about this, and you vow to slim down.
    The local gym is offering a discount on an annual membership, so you forgo the pay-as-you-go option of $10, and sign a year-long contract. If you are like many people, you go to the gym a few times in January, less frequently in February, and not so often after that. 6 You have several reasons (excuses?) for absenting yourself: you lack the time; you are too embarrassed to show up in your Spandex with that belly roll; you’re out of shape anyway, so you aren’t able to exercise vigorously; maybe you just plain don’t like sweating. Because you don’t go to the gym more than a few times, your decision to pay the annual membership fee costs you a lot more money than simply using the pay-as-you-go option would have.
    Your failure to stick to an exercise routine once you’ve signed up for an annual membership could be because you were too optimistic—you truly believed you were going to exercise much more than you did in the end. Another, more sophisticated, explanation is that you have “played a game with your future self.” That is, you have a hunch that you may be less willing to exercise in the future. You know that with the current pay-as-you go option, you have a choice. You imagine, for example, that you could use the $10 fora one-time visit, or you could go to a movie instead of the gym. You have a feeling you’d choose the movie. So you pay the annual membership now in order to reduce the perceived cost in the future. If you pay now, you figure, then later on you will not give your lazy, future self another reason (saving the $10) to not go exercise.
    Other people and organizations may also care about your health—often because it can save them money. Consider the incentives some employers and insurers use to try to encourage employees to exercise. Say you’re called in to get yourself weighed and measured. You’re also asked if you smoke. If you’re deemed to be the right weight, you don’t smoke, and you have normal cholesterol and blood pressure, your company reduces or refunds the co-pays and deductibles you’re paying in your health care premium, saving you $750 a year. Not bad, right?
    This is exactly what Safeway supermarkets tried to do with its Healthy Measures program, which it rolled out with great fanfare to its nonunion workforce (mostly people who work in offices). “By our calculation, if the nation had adopted our approach in 2005, the nation’s direct health care bill would be $550 billion less than it is today,” CEO Steven Burd boasted in a 2009 editorial in the Wall Street Journal . 7 Burd claimed healthcare costs for his company stayed flat.
    Following the publication of his article, Burd became a celebrity. Companies and insurers began exploring similar programs. In Washington, D.C., Safeway became a poster child for healthcare reform. President Obama talked of Safeway’s cutting its healthcare spending by 13 percent. The House and Senate worked on a so-called Safeway Amendment, which could save families with average health benefits thousands a year.
    One needs to be careful when extrapolating Safeway’s claims to possible savings for the nation. First, the statistics Mr. Burd reported were problematic. 8 It is always hard to conclude what works andwhat doesn’t when the people providing the data have an interest in the conclusion. Additionally, the Safeway gambit was not a controlled experiment. For example, we don’t know what fraction of the change was due to healthy people deciding to stay on the payroll or to join Safeway as a result of this policy. The less fit people may have simply chosen to work for a different company. Either way, Safeway saves money—which is great—but from a global perspective, the problem just ends up being rolled somewhere else.
    None of this means Safeway’s incentive scheme was bad. But from a practical perspective, designing incentives that truly change behavior is challenging. In recent