In the study, more than 200 participants were recruited from the employees at one university and three community colleges in North Carolina.
Participants were arbitrarily assigned to be given no money, 7 dollar per percentage point of weight lost or 14 dollar per percentage point of weight lost, during the first three months.
It was found that the larger financial incentive resulted in the greatest short-term weight loss.
At 3 months, participants with no financial incentive lost 2 pounds, those in the 7 dollars group lost about 3 pounds, and those in the 14 dollars group lost nearly 5 pounds.
The participants in the 14 dollars group were five and a half times more likely than those in the no-incentive group to lose 5 percent of their body weight, a point where weight loss has clinically important health benefits.
"Financial incentives tied directly to weight loss are an attractive strategy from an employer's perspective because they require no start-up costs and employees receive the incentive only if they achieve the targeted weight loss goal," said Eric Finkelstein, Ph.D. director of RTI's Public Health Economics Program and the study's lead author.
"Employees may also prefer incentive-based programs that provide the resources and flexibility to improve their health without being tied to the small menu of options that may be offered by the employer," he added.
The study appears in the Journal of Occupational and Environmental Medicine.