Paying more for good intentions

WASHINGTON -- In health clubs, hope springs eternal. Membership rosters are full of people who are certain they will show up more often -- but don't.

Just the same, the desire to expect better results next time is so strong that people will pay more for memberships rather than have to choose between exercising more and giving up their false hopes, two economists say.

"We see evidence people overestimate all sorts of good things about themselves, and self-control is one of them," said researcher Stefano DellaVigna, assistant professor of economics at the University of California, Berkeley.

DellaVigna, with his wife, Ulrike Malmendier, assistant professor for finance at Stanford University, reviewed three years of records on 7,978 members of three health clubs in Boston to measure the costs of overestimating self-control.

The economists were trying to gauge the difference between what people actually do and what people could do if they wanted to maximize the use of their money.

The clubs offered several membership options. A member could choose an $850 yearly contract which could be renewed, an $85 monthly contract that automatically renewed unless it was canceled, and two pay-per-visit plans -- $100 for a 10-visit pass or $12 for an individual visit.

For people who work out often, yearly and monthly contracts were cheaper than per-visit plans because the contracts set no limit on how many times a person could work out. Constant workouts could drive the average cost of an individual visit below $10.

In this scenario, the hypothetical rational club user, seeking to maximize the value of the contract, would become a gym rat.

But the researchers said that's not what happened. Most members chose the monthly contract, which was more expensive than the yearly contract, which effectively gave two months free.

Members on monthly contracts showed up on average 4.8 times a month, for a price per visit of $17. Only 20 percent of monthly contract users paid an average of less than $10 per visit, DellaVigna and Malmendier said.

And when monthly members quit, they used a way that cost more, the researchers said. The average quitter did not drop the contract until more than two months had elapsed since the last visit, thereby paying an average of $185 for nothing.

"I think it's part of our struggle to be good and have good intentions for the future, but then we don't keep up," DellaVigna said.

When people are asked how often they use a club, they frequently will say they come three times a week, said Rick Caro, president of Management Vision Inc., a New York City health club industry analyst who was not involved in the study. "When you look it up in the records, they have less than that, sometimes one and one half times a week," he said.

But this doesn't mean consumers are not getting value they want, Caro said. Some people "know full well they will have uneven use," he said. For instance, they might expect to be away on vacation or too busy to exercise during the holiday season.

But why not be economically rational and choose the cheaper per-visit plan?

Perhaps they think of a per-visit plan as a drag on their good intentions, especially when they are starting an exercise program, Caro said. With individual-visit pricing, consumers always have to face the fact that their visits cost them money, while contracts have a set price for as many visits as the member wants, he said.

However, Caro said the Boston club experiences may not represent what happens elsewhere in the nation.

At Main Street Fitness Center in Jackson, members must sign up for a six-month period, which lets them visit as often as they like.

Universal Health and Fitness Center offers 12-month contracts for its members with unlimited access for visits.

"When you dedicate yourself to doing fitness, it takes longer than a month," said Lance Gragg, program and sales coordinator at the health club.

"We don't want to contract out for 12 months to take your money but so you can see the effects and how you progressed during that time period."

Fitness is a lifelong commitment and while it used to be considered a luxury, not it's a health necessity, Gragg said.

"You're making a commitment to a healthier lifestyle."

Another club operator thinks members elsewhere may be working out more times than the Boston members did, which was about 58 times a year. "I've always heard the number was 100 visits a year on average," said Joe Cirulli, owner of the Gainesville Health and Fitness Center in Gainesville, Fla.

If club members are not showing up often, something is wrong, because using the facilities encourages people to renew their contracts, Cirulli said. "I've never found a business to be successful by having people not come," he said.

Features editor Laura Johnston contributed to this report.