‘Put Your Money Where Your Butt Is’

That’s the clever title of the latest paper from Dean Karlan (one of the founders of StickK.com, who was featured in this New York Times Magazine article yesterday along with my colleague John List) and co-authors Xavier Giné and Jonathan Zinman.

The researchers had surveyors approach people on the streets of the Philippines and offer them the opportunity to open a bank account that paid zero interest. The kicker: all the money deposited would be forfeited if, six months after opening the account, the account holder’s urine test showed evidence of smoking.

It doesn’t sound like much of an offer: zero interest, a good chance you’ll lose any money you deposit, and you have to consent to the embarrassment of a urine test. Still, the power an experimenter yields over subjects never ceases to amaze me — more than 1 in 10 of the people approached actually signed up for the account!

It worked surprisingly well, too. The treatment-on-the-treated estimate suggests that about 30 percent of those who opened an account quit smoking because of the account. That’s a higher success rate than is generally seen among those who try to quit smoking using nicotine patches, etc.

Also, who knew that people in the Philippines wanted to stop smoking? I thought kicking the habit was an exclusively American obsession.


This is not about quitting cigarettes, but I'm confused. A while back, this blog asked why won't businesses do more experiments. Then we see a post saying gee, charities should be run more like a business. And now this post links a NY Times article saying charities should do more experiments to figure out why people give to charities. My head's going to explode!


I'm also Filipino and not offended. I dont think the comment was not meant to be derogatory. He was just trying to exaggerate the point of American's obsession of quitting smoking. Thus the comment: "I thought kicking the habit was an exclusively American obsession."

Princess Leia

Hey! One of Steve's best friends from college is Filipino. No joking.

Joey S

I am a Filipino and I am not offended. These race thing, forget about it, nationality works best only in passport.

It might be true that other races are looking down at us. But from my observation, we generally sleep peacefully at night and smile at simple pleasures in life.


To answer your question: "Also, who knew that people in the Philippines wanted to stop smoking?" - I'd say the same people who know that people in 'foreign countries' have electricity, I guess, which would not include you.

That's one darn stupid last comment. You sound like a culturally ignorant oaf. Please, I thought better of you, I know you're not – show me you're not.

Realise that you do not write for an American audience, but for a global audience. Also realise that comments like this are disparaging and sound awful to anybody in this world who has some cultural exposure. They also reinforce the (untrue) stereotype that Americans are cultural imbeciles without passports who know nothing about the world outside their shores, and yet have a dangerous level of influence upon it. I don't think you want to contribute to that.


So this is really just a way for people to hold themselves accountable when they make a pact to quit smoking. The bank holds their money and is the sole judge as to whether the person complies with their promise to quit.

Next, I would like to see what the average deposit is. If it is not more than a token amount that might hurt in the short term, fine. If people are putting their next eggs in this account, shame on the banks. 70% of these people are losing their money.



Two things-

1. So Filipino and American are races now? I thought they were just nationalities.

2. Nowhere did he say Filipinos are dumb. He just said he thought smoking cessation was a predominantly American obsession. You're the one who made the leap to "people who aren't obsessed with smoking cessation are dumb, therefore he is calling Filipinos dumb."


Thanks, Steve, for that insight into the Everyman nature of Filipinos. This inspired me to do some research into Americans.

It turns out, to my amazement, that Americans:

* eat food (just like regular folks!)
* walk with their left foot, followed by their right, in a 'walking' motion
* breathe air
* write in English and in other languages
* are mammals.

For other incredible but true facts about the residents of this exotic country, consult Google. Apart from their hubris, they are just like us!


I find the comment "who knew that people in the Philippines wanted to stop smoking?" very strange, and yes, at first glance, racist.

Why on earth would Philippine people not be aware that smoking is bad, and want to quit?

Does he really mean that only people in the US want to quit? What about Europe? I really think Steven should post something.


Stephen King wrote a short story about signing a contract with ex-mobsters who guaranteed the signee would stop smoking. The smoker knew that he would be watched carefully and that smoking would be punished in increasingly harsh ways: wife and children roughed up, a finger cut off the smoker, ...... with the final punishment being death. They did guarantee the smoker would stop, one way or another.


Ah, I see. Thanks for clearing that up. The situation is kinda like that one Stephen King story "Quitters Inc." Highly recommended.


Interesting results, but I take this with a grain of salt. Couldn't this also show that smokers are good at cheating at nicotine tests? Not sure how accurate this document is:

but it says that nicotine levels last for about 40 hours (implied by a 20 hour half-life). According to my skim of the article, the test subjects are not randomly checked for smoking (only once towards the end of the six months). Seems like all this test proves is that 30% of the group was smart enough to not smoke the preceeding 40 hours before cashing in their account. Of course, the interest was 0% percent so their is really no incentive to do this, but my guess is that some cheaters actually got their money.

Anyway, still an interesting result--I just wouldn't be so sure about comparing to (presumably more robust) studies on Nicotine patches.

michael donnelly

Ty, there's one flaw with your idea (which is pretty cool in general) -- non-smokers would sign up too. I'm a non-smoker, so committing to being smoke free would be easy for me.

a doctor

Someone is confused about where urine comes from.


I thought the post was about stop buying other company's papers and putting your money where you work today. That's where you are, that's where your time is, there's your life's real investment. It would be a helluva post. 8)

David A. Spitzley

Basically, the expected loss (inflation plus risk to the invested capital) is being judged by these people as a reasonable cost for assistance in quitting smoking. If anybody who didn't smoke signed up, that would be economically odd, but this is just more evidence that monetary risk is a viable incentive strategy for behavior change.


I hope a bank (or better a credit union) in the U.S. sees this, and decides to do something similar, with one change to act as an incentive. A portion of the money lost by those who could not quit smoking would be divided up among the quitters, based on deposit size. The quitters could look at quitting as an investment (beyond just saving from not buying the expensive cancer sticks), meanwhile the banks would skim off the non-quitters money and make interest on loaning out the deposits. Those who couldn't pull off quitting would be the only losers, though they get to lose twice. There's some testing logistics, but somehow I think banks would just turn those into profit makers (fees) rather than problems.


Wait, I don't get it. A person is willing to risk capital in exchange for an inflationary loss at most? I'm confused.


that last comment sounds kinda racist- like the Filipinos are too dumb for public health initiatives- then again, tobacco industry propaganda dominated public sentiment here up until the 90s- one can only cringe at the amount of marketing which will be pumped into the third world, to push an addicitive drug- indeed, "kicking the habit" is a misnomer for an addictive drug- kicking the monkey of your back is more accurate- it's not simply inner will modification, but an outside force (support) is also needed to break off from the addiction

DTB Author

Fascinating blog. I'd like to see an article on the economic effects of Pioneer pulling out of the plasma screen production business.