{"id":44122,"date":"2010-09-30T04:00:39","date_gmt":"2010-09-30T11:00:39","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/?p=44122"},"modified":"2019-09-11T01:16:28","modified_gmt":"2019-09-11T08:16:28","slug":"how-to-use-a-commitment-contract-to-change-your-habits","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/how-to-use-a-commitment-contract-to-change-your-habits\/","title":{"rendered":"How to use a commitment contract to change your habits"},"content":{"rendered":"

This article was written by Pop at Pop Economics<\/a><\/b>, a great new blog about investing, personal finance, economics, and more.<\/i><\/p>\n

It’s now 9pm on August 30th. I’ll finish this article by 11:59pm on August 31. I know this, because if I don’t, I’ll lose $1,000.<\/p>\n

Call it an incentive. I’ve written about behavioral economics over at Pop Economics<\/a> for three-quarters of a year now. There are an infinite number of subjects to cover, but they all boil down to the same idea: People respond to carrots and sticks.<\/strong><\/p>\n

\"CommitmentAnd to make sure that I hit this article deadline, I gave myself a very big stick. About a month ago, J.D. and I set up a legally binding “commitment contract”. If he doesn’t get an article from me in a few hours, I owe a set of charities $1,000.<\/p>\n

Crazy? Yes. But it’s also a brilliantly simple way to defeat laziness and procrastination. I’ve actually flaked out on J.D. before. Heck, I’ve flaked out on writing for my own blog before. I like the idea<\/em> of building a hugely successful blog, but every once in a while, I lose the motivation to keep churning out stories.<\/p>\n

Commitment contracts are used for all sorts of goals. In January, you decide to lose weight, but by March, the gym you signed up for is reaping the proceeds of a dormant membership you can’t break. You decide to give up smoking, but doing it “just once” while at a party leads you back to addiction.<\/p>\n

But how likely would you be to quit if you lost $1,000 every time you skipped going to the gym or lit up a cigarette?<\/strong> Commitment contracts are designed to set the penalties of missing your goal so high that breaking it isn’t even an option.<\/p>\n

<\/span>How It Works<\/span><\/h2>\n

J.D. and I actually entered a formal arrangement, set up through Stickk.com<\/a>. Stickk is a commitment contract website with a co-founder who has studied how effective the contracts can be.<\/p>\n

In one study conducted in the Philippines, smokers committed to quit smoking for six months. If they failed a urine test that detected nicotine, they’d lose six months-worth of smoking money as a penalty. At the end of the program, the economists found that the the contracts improved the chances of quitting by 30%, which is better than the improvement other tools like a nicotine patch gives you.<\/p>\n

But there’s no requirement to make it as formal \u2014 and you don’t even have to set financial stakes. Another common tactic is to make the contract and let your goals and progress be known to your friends. Rather than a financial penalty, if you fail, you have to broadcast that failure to everybody. The shame itself should help keep you on track.<\/p>\n

But no matter the structure, the contract requires three basic components:<\/p>\n