For decades, people have been paid to lose weight, attend school, go to the gym, avoid teenage pregnancy, and even protect forests. These programs rely on financial incentives—money—to motivate behavior change, and they often deliver promising short-term results. But there’s a catch: when the money stops, the behavior usually does too.
This challenge has long frustrated researchers. In his recent work, UW–Madison psychology professor Markus Brauer offers a promising path forward: incorporating psychological insights to make behavior change last. In collaboration with Dr. Sophia Winkler-Schor, a UW–Madison alumna and colleague at the Nelson Institute for Environmental Studies, Brauer analyzed more than 100 studies and found that long-term behavior change requires more than just financial rewards.
They identified four key psychological constructs that can help sustain behavior after the incentives end: motivation, habits, social norms, and recursive processes.
“These four constructs are like pillars,” Brauer explains “Every program that uses financial incentives needs to use all four; if one of these pillars is missing, the entire program collapses and individuals will revert back to their original behaviors.”
Financial incentives are a form of extrinsic motivation, but long-term behavior change is more likely when people begin to internalize behavior. In other words, people continue the actions not for the reward, but because it feels enjoyable. Social norms shape what people believe is the right or normal way to be, while habit formation allows behavior to become automatic over time. All of these processes reinforce one another through a recursive loop, where new behaviors, social norms, and habit formation build on top of one another.
To foster this change, researchers outlined eight actionable strategies that can be implemented alongside financial incentives, including changing individuals’ perceptions of what other people do and approve of and using a mix of motivations to drive behavior.
These recommendations aren’t just theoretical, they’ve been affirmed by real-world programs. The strongest examples come from environmental conservation programs in which small land owners are paid to engage in farming practices that protect forests and adopt sustainable practices, a model called Payments for Ecosystem Services (PES).
Across the studies, three common patterns emerged: farmers were granted some freedoms in what trees are planted and where (fostering a sense of autonomy and competence); long term environmental and economic benefits were emphasized (helping internalize previously extrinsic motivation); and social norms shifted as more farmers interacted with one another (increasing the likelihood of them continuing to plan and maintain sustainable practices). In many of the most successful programs, these changes were also paired with efforts to build habits, making it more likely farmers would continue planting and maintaining trees even after the incentives ended.
Still, some critics argue that financial incentives should be abandoned altogether.
Brauer firmly disagrees. “Absolutely not,” he says. “Financial incentives will always be around and are crucial to get people to try a new behavior or overcome resistance to change. We just have to learn how to use them judiciously.”
These smarter strategies are not only more effective, they’re cost-efficient. And in a world facing serious environmental, economic, and social challenges, Brauer believes they’re more important than ever for “the survival of people and the planet.”
Written by Sruthi Sitamraju x’27