Why We Pay for Gyms We Don't Use
What a large dataset of gym members shows about expected visits, the price per visit and the way a payment fades from view.
Answer to the question
Why do we pay for gyms we don't use?
Because the person who signs up expects to go more often than the person who later decides each evening. In a dataset of 7,752 members at three gyms, flat-fee members averaged 4.3 visits a month, paying more than 17 dollars a visit when a ten-visit pass cost 10 dollars. Overconfidence about future attendance is the authors' main explanation.
Key takeaways
- In a dataset of 7,752 members at three gyms, members on a flat monthly fee of a little over 70 dollars attended 4.3 times a month on average.
- That worked out at more than 17 dollars a visit, while a ten-visit pass cost 10 dollars a visit, and the authors attribute the pattern mainly to overconfidence about future attendance.
- In a gym-attendance study, participants greatly overpredicted their attendance after an incentive programme ended, and they had not anticipated the rise in attendance that followed.
- Experiments on payment depreciation found that the weight of a past payment fades as time passes, which leaves a renewing contract running after the payment has stopped mattering.
- In a workplace field experiment, workers offered a commitment contract at the end of an incentive programme kept up changes in gym visits after the incentive ended.
Members of three gyms in a large US dataset mostly chose the flat monthly fee, and over their membership they would have spent about 600 dollars less on a ten-visit pass. That is the arithmetic behind paying for a gym you seldom use.
The flat monthly fee cost more than the ten-visit pass
Contract choices and daily attendance were recorded side by side for 7,752 of those members over three years, in the study by Stefano DellaVigna and Ulrike Malmendier. Members on the flat monthly fee, a little over 70 dollars, attended 4.3 times a month on average. Divided out, each visit cost them more than 17 dollars, while a ten-visit pass was on offer at 10 dollars a visit. Over their membership, flat-fee members would have spent about 600 dollars less on the pass. The authors read the pattern as overconfidence about future attendance: a member who expects to go often sees a monthly fee as a bargain, and that expectation sets the price the member will accept.
The comparison shows what the flat fee sells. It buys the right to go as often as the member likes, and a buyer planning frequent visits values that right above the pass. In this dataset the plan ran ahead of the visits, and the member paid for the plan.
Richard Thaler and Cass Sunstein, in Nudge, give the pattern a vocabulary through two selves. A farsighted Planner makes the purchase, and a short-sighted Doer decides each evening whether to go. The Planner signs in a calm moment, when attending feels easy, and the Doer meets the real evening, with its tiredness and its rival plans. The Hot Cold Empathy Gap describes why the calm self predicts the busy one so poorly. One self buys the membership and a different self has to use it.
The practical test for any gym contract is plain arithmetic: the fee divided by the visits actually made, set against the price of a pass. A member can run it with last month's count, since the monthly bill never prints that price.
Gym fees are priced on visits we hope to make
Gym-goers asked to predict how often they would attend after an incentive programme ended greatly overpredicted, in work by Dan Acland and Matthew Levy. Attendance did rise after the programme, consistent with a habit forming, yet participants had not seen that rise coming. The authors fit the results to a model that combines projection bias, the tendency to assume that a future self will feel as the present self feels, with habit formation. Anyone signing up on a motivated day is making the same projection.
Each contract type asks the buyer to hold a different belief about that future self, as the table sets out.
| Gym option | What it is priced by | What the buyer must believe |
|---|---|---|
| Flat monthly fee | The month | Visits will be frequent enough to beat a pass |
| Year-long contract | The year | Attendance will stay high for twelve months |
| Ten-visit pass | The visit | Nothing about the future; every visit has its price |
Because the forecast is made at signing, the same optimism reaches whichever contract is longest. A year-long contract stretches the Planner's forecast over twelve months, and the Doer has twelve months of evenings to answer it.
The pass is the only option priced the way the research measures the outcome, per visit. It also closes the books at every use: the cost and the benefit sit together, the bookkeeping that What is mental accounting describes. The monthly fee shows its price once, at signing, and then keeps no running total, which leaves the Planner's forecast unchallenged until the bank statement.
The payment fades from view while the contract keeps running
Any fee paid in advance puts the cost of a purchase before its benefit, the case John Gourville and Dilip Soman studied. People keep a mental account of the exchange, and an unsettled account gives the past payment a sunk-cost pull on the enjoyment of what is still to come. The authors predicted that this pull weakens as time passes, a drift they named payment depreciation, and across several experiments in a variety of transactions they found evidence of it.
Applied to a gym fee, the pattern would run as follows, with the flat fee as the case where it matters most. In the days after a payment, the money already spent presses on the decision to go, and the sunk cost fallacy that What is the sunk cost fallacy explains is at its strongest. Weeks later the payment has faded from view, but the membership has not lapsed. The fee is fixed and the weight it carries is not, so a contract that renews itself keeps charging after the payment has stopped mattering to the person paying.
The DellaVigna and Malmendier dataset also records delays in cancelling, a pattern The Sludge That Keeps You Subscribed examines from the side of contract design. Seen from the buyer's side, the delay is the same fade: a charge that no longer prompts a decision does not prompt a cancellation either.
A prepaid gym membership can be read as a commitment device of the kind Nudge describes: the Planner pays ahead so that the Doer faces a cost for staying home. A device of that kind only works when the Planner's forecast of the Doer is right, and the evidence on forecasts is where the gym case turns.
Acland and Levy's model also bears on the remedy, and on how much a gym member can expect from one. Their results suggest that the same overprediction behind the flat fee may explain why commitment devices are taken up less than they might be: a buyer who expects to attend freely sees no use for a device that enforces it. Does Precommitment Really Work looks at what such devices achieve once they are in place.
A field experiment with workers at a large company, by Heather Royer, Mark Stehr and Justin Sydnor, tested one. A financial incentive for gym visits worked strongly while it lasted, and the open question was what would happen when it ended. Participants were offered a commitment contract at the end of the incentive programme, funded with their own money, and the contract drew demand. How Long a New Habit Really Takes covers why lasting change is slow to measure, and the field experiment adds a concrete result to that picture: workers offered the commitment contract kept up the changes in their gym visits after the incentive had ended.
Common questions
Why do we pay for gyms we don't use?
The person who signs up expects to go more often than the person who later decides each evening. In a dataset of 7,752 members at three gyms, flat-fee members averaged 4.3 visits a month, paying more than 17 dollars a visit when a ten-visit pass cost 10 dollars.
Is a flat gym fee always the worse deal?
No. It is the better deal for anyone whose visits run high enough to bring the price per visit below the price of a pass. The research shows that many members expected to be in that group and were not.
What is payment depreciation?
It is the gradual fading of a past payment's weight as time passes. Gourville and Soman predicted it for purchases paid in advance and found evidence of it across several experiments.
How can a buyer test a gym contract?
Divide the fee by the visits actually made in a recent month and compare the result with the price of a single visit or a pass. Set a date to run it again.
Sources
Thaler, R. H., & Sunstein, C. R. Nudge: The Final Edition. Seed book; vault hub Books/Nudge.
DellaVigna, S., & Malmendier, U. (2006). “Paying not to go to the gym.” American Economic Review, 96(3), 694-719. doi:10.1257/aer.96.3.694 https://doi.org/10.1257/aer.96.3.694
Acland, D., & Levy, M. R. (2015). “Naiveté, projection bias, and habit formation in gym attendance.” Management Science, 61(1), 146-160. doi:10.1287/mnsc.2014.2091 https://doi.org/10.1287/mnsc.2014.2091
Gourville, J. T., & Soman, D. (1998). “Payment depreciation: The behavioral effects of temporally separating payments from consumption.” Journal of Consumer Research, 25(2), 160-174. doi:10.1086/209533 https://doi.org/10.1086/209533
Royer, H., Stehr, M., & Sydnor, J. (2015). “Incentives, commitments, and habit formation in exercise: Evidence from a field experiment with workers at a Fortune-500 company.” American Economic Journal: Applied Economics, 7(3), 51-84. doi:10.1257/app.20130327 https://doi.org/10.1257/app.20130327