Everybody likes some extra cash, but extra cash for shedding extra pounds? Sounds good, doesn’t it? Well it turns out it not only sounds good, it actually works.

A new study published in the Annals of Internal Medicine shows that money is a great motivator when it comes to weight-loss, more so for groups than individuals.

The research team, led by Dr. Jeffrey Kullgren from the University of Michigan Medical School and the Ann Arbor VA Healthcare System, separated 104 obese employees of the Children’s Hospital of Philadelphia into three groups. One group was offered a $100 incentive for meeting individual weight-loss goals at four weeks, eight weeks, 12 weeks, 15 weeks, and 20 weeks.

“By the end of the study, the competitive weight-loss group lost an average of 10.6 pounds compared with those in the control group who lost just 1 pound.”

The second group was divided into groups of five members, but the identities of fellow group members were not revealed. These participants were also offered the $100 incentive every four weeks for meeting weight-loss goals, as well as the opportunity to earn more cash if other group members were unsuccessful.

Each month, only the group members who met or exceeded their weight-loss goals could split the $500 among them; those who did not reach their individual target weight were not part of the split, and in the event that no members met their goals, their money was forfeited.

Members of the third group, a control group, were given a link to an online weight-loss network and scheduled for monthly weight measurements, which they were reminded of by text or email.

After 24 weeks (6 months), the competitive weight-loss group lost an average of 10.6 pounds compared with those in the control group who lost just 1 pound. Participants in the individual group shed 3.7 pounds.

“ are often overly optimistic about their abilities relative to others and, thus, may have expected greater success, and a larger reward, than fellow group members. Second, expectation of a larger reward would have been reinforced because most group members did not meet their weight-loss goals in most months, leaving a larger reward for those who did meet goals,” said the authors.

Interestingly, a follow-up four months after the end of the study showed that members of the individual weight-loss groups maintained their weight-loss better than members of the other two groups. This suggests that the motivation from being part of a group and the opportunity to win more money dissipated once the incentive was no longer part of the deal.

With obesity among adults and children at an all-time high, Kullgren states "This is yet another approach that we need to have in our tool kits for addressing this really major and vexing public health problem" by combining it with diet and exercise counseling. The issue lies in figuring out how these types of approaches can “complement what we already know works," he notes.

The Bottom Line

Research shows that team-based weight loss plans are more effective than trying to do it on your own.

A study by researchers at the Mayo Clinic, presented at the American College of Cardiology meeting in San Francisco last month, showed that a weight-loss program that provided a $20 incentive for losing four pounds – along with a $20 penalty for not losing weight – allowed participants to achieve weight-loss of about nine pounds over a year, four times the amount lost by those without the financial incentive.

But money and other incentives are just the proverbial “icing on the cake.”

As weight-loss and wellness plans become part of workplace culture, many are utilizing reward-based programs to improve employee health, and with the upcoming Affordable Care Act, employers may be able to promote even more of these programs. Still, researchers note that different strategies, including providing healthier food choices in the workplace, may be a better impetus to improve company-wide wellness.

Remember, while money can be a great motivator, what better motivation is there than your long-term health and wellness?