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Welp, it’s 2020!
Now be honest, how many of you decided to kick off the new decade by making a resolution
to get into shape?
Does this sound familiar?
You head into your local gym, the bodybuilders are pumpin’, the club music’s bumping,
the smoothie station is... blending.
And a sales rep presents you with a “menu” of contract options:
Yo, you ready to get jacked?
Sweet.
You can sign up for a whole year for $600.
Or on a month-to-month basis for $58 a month.
OR pay-per-visit for $10 a day.
So… which one should I choose?
The “New You” plans on working out 3 times a week, so the cost-per-visit for each plan
shakes out like this. We're not including those extra “startup” fees, since most
of the time, those only exist so they can be waived, to make you feel like you’re
getting a bargain.
From a purely mathematical standpoint, the annual contract makes the most sense.
And, maybe by “locking yourself in,” you’ll be more likely to stick to your resolution.
Psychologists call this strategy “precommitment,” when your present self tries to control the
behavior of your future self by making obligations that your future self can’t get out of.
Social scientist Jon Elster cited the story of Odysseus and the Sirens as a classic example
of precommitment.
The Sirens were creatures of Greek mythology whose beautiful songs lured sailors to wreck
their ships on the rocks.
Odysseus wanted to hear the Sirens’ songs, so he instructed his men to tie him to the
mast.
In other words, he didn’t trust his future self to resist temptation, so he took steps
to limit his own freedom.
In the same way, gym members tie themselves to a financial commitment to prevent their
future selves from succumbing to the temptation of not working out.
Essentially, precommitment is an admission of weakness.
So, does it work?
Sometimes, yes.
Setting up an automatic withdrawal on your paycheck into an investment account is a good
way of precommitting to a savings plan.
And buying healthy food at the grocery store does precommit you to cooking at home rather
than eating out.
But when it comes to gym memberships… the results are a little less optimistic.
According to a survey of over 5,000 American gym members, 82% go less than once a week,
and 22% stop going completely after 6 months.
So much for precommitment.
In light of those odds, maybe it’s best to go with the monthly contract.
Sure, it costs a bit more, but at least if my future self betrays me I can drop out and
cut my losses.
Right?
Maybe not.
Another study on the habits of gym-goers (or, non-gym-goers) found that members who subscribed
to a $70 monthly program ended up using it only 4.3 times per month.
Even though their gyms had a $10 per visit option, they were essentially paying $17 per
visit!
And here’s where it gets weird: the whole point of these monthly plans is that you can
cancel whenever you want.
But people in the monthly plans were actually 17% more likely than annual members to keep
their subscriptions going after 12 months… even if they weren’t using them!
Future Self, what the heck is wrong with you?
The answer is that monthly subscribers were on an “auto-renewal” program, which simply
charged their credit cards every month without needing explicit permission from the customer.
Because it’s a passive transaction, these auto-renewals don’t cause much “negative
utility,” what economists call the emotional pain of losing money.
If those people had to actually hand over 70 bucks in cash on the first of every month,
a lot more of them probably would’ve cancelled their memberships.
Auto-renewals, or “evergreen clauses,” are pretty ubiquitous these days, and they
are convenient.
Imagine having to manually renew every regular service you use!
But some companies are less than forthright about it, hiding the clause behind free trials
or making cancelling an overcomplicated process.
You often won’t even be notified when your subscription is renewed.
They want you to forget about them.
Gym memberships are especially tough to cancel, because it feels like admitting defeat.
And many gyms charge re-sign up fees that make members just keep paying in the hopes
that maybe they’ll start using it again.
It sounds like a broken system, but this is actually how it’s designed to function.
See, running a gym is actually really expensive.
High utility bills, big spaces filled with tons of fancy equipment, a large staff of
trained professionals… in order to pay for all this, they have to sign up way more people
than the facility can actually serve.
Major fitness chains commonly recruit between 5 to 10 thousand members per location… which
have max capacities of around 3 to 5 hundred people.
If just 5% of their members showed up at the same time, they’d have to start turning
people away.
So despite all those motivational posters and slogans, they’re counting on the vast
majority of their members to rarely (or never) use the service they pay for.
The silver lining is that if you happen to be one of the small minority who actually
uses your gym regularly, well, you’re makin’ out like a bandit.
3 or 4 dollars a visit is an incredible steal, only made possible by all those other resolution-breakers
who are subsidizing your wellness.
Now, of course we’re not saying that you shouldn’t try to get into shape!
Regular exercise is one of the best things you can do for your body, mind, and pocketbook,
since many expensive medical problems can be prevented with a healthy lifestyle.
But there are cheaper ways to kickstart it.
For instance, you can buy a nice pair of running shoes or a bicycle and chart a course through
your neighborhood.
Home fitness equipment like weights, bands, even machines can get pretty pricey, but at
least once you own them, you don’t have to keep paying every month.
There are also lots of inexpensive apps and online courses and free YouTube videos that
can help get you started.
Many fitness experts will say that the most important thing isn’t what equipment you
use, or how many calories you burn in a day, but finding a way to make exercise a lifetime
habit.
So how do you do that?
Don’t look at us, this is a financial show!
But, we can say that making big financial commitments doesn’t seem to work.
If you already exercise three times a week, joining a gym can be a great bargain.
But if you’re just starting out, don’t think you can extort your future self into
exercising with the threat of a deadweight loss.
Turns out our future selves are pretty crafty at wriggling out of precommitments.
Especially when the pain of losing money is
no match for the pain I’m gonna feel in my legs tomorrow.
And that’s our two cents!
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So tell us! What is your favorite or most effective fitness product you've ever bought for yourself?
Tell us in the comments!