Employers are increasingly using wellness incentives, including penalties for unhealthy behavior. Survey data suggests that people are willing to accept the principle of penalizing those perceived to take health risks, but the equally relevant question of the magnitude of acceptable penalties is unclear.

While the principle of penalizing overweight and obese people has some support, findings from a population-level experiment (n=1,000) suggest that the acceptable size of penalties is comparatively small, around $50: more than 10-fold below levels favored by advocates. Reward-based incentives are favored over penalty-based ones by a factor of 4. Of two different ways of framing penalty programs, poorer and higher weight groups appear to find the one that is more overtly penalizing less acceptable.

Levels of incentives matter on effectiveness as well as on ethical grounds, as it cannot be assumed that it is equally easy for all to meet health targets to secure a benefit or avoid a penalty. Programs should be designed to engage, not to frustrate those most in need of health improvement. Employee involvement in determining incentive types and levels, and explicit justification for program design can help both employees and employers to reap benefits.