Banner Image Fitness Economics

As a trainer turned-behavioral economics-major, I’ve become increasingly aware of how economics applies to everything we do in the industry—and it can have a significant impact on our own financial success and even our clients’ fitness success. For example, I was surprised to learn about one particular theory, called Goodhart’s Law, and how it translates so perfectly to how the fitness industry often does things counter-intuitively, “economically” speaking anyway. Read on to see how understanding a few simple rules of economics could help you become a better, and more profitable, fitness professional.

A Good Measure

Charles Goodhart is a British economist and professor who observed this adage, which is highly relatable to the fitness industry:

“When a measure becomes a target, it ceases to be a good measure.”

Goodhart explains in his theory that whenever a specific measure of productivity becomes a specific goal, it inherently skews all of the other associated measures. For example, if someone’s target is based on volume of tasks, then the content and length of those tasks will undoubtedly be affected.

The “Economics” of Fitness

How does this theory apply to what we do in our workouts and program design? It relates to a “rule” of doing business that my dad, a construction contractor, taught me long ago. When dealing with clients, he’d tell them this: “Fast, cheap, or good. You can only pick two.”

What he meant was, if clients want something done cheaply and fast, it won’t be good. If they want it cheap and good, they won’t get it fast. And if they want it good and fast, it won’t be cheap. When you think about it, this concept makes sense for anything to do with business transactions in the fitness industry, workout programming, and even client expectations.

Take the following three examples:

Business Transactions

Let’s use an example from classic employee incentives. The personal-training manager at a health club wants to improve revenues for her department. Since her trainers have an average close rate of 5% from their initial assessments she assumes that increasing their “complimentary session” volume will increase her revenue. The average amount of “complimentary sessions” completed per week was five per trainer. The manager decides to increase the trainers’ quota to 10 each. She tells them she will offer a $75 bonus for every completed quota.

Good idea? Not so much.

According to Goodhart’s Law, now that the manager has set the volume of assessments (the measure) as the trainers’ weekly goal (the target), her trainers have begun making shorter, less personalized assessments, without asking any follow-up questions or scheduling future appointments. Thus, the unintended consequence of our new incentive structure is that the employees’ close rates have actually decreased to 2%, and consequently are now earning slightly less revenue than before.

Workout Programming

Consider burpees as another example. Do you want your bootcamp participants to give you more burpees, faster burpees, or better burpees? Prescribing “as many burpees as possible” in a minute is a heck-of-a workout. But according to Goodhart’s economic theory, this means clients will ultimately perform lower-quality burpees.

If you want your clients to perform better-quality repetitions, they’ll likely take more time to do it, which means they will undoubtedly perform fewer reps throughout the workout.

Or take the case of a high-school football coach who wants his or her athletes to do 100 burpees, nonstop. It’ll take some time, and exercise technique will eventually break down. That’s Goodhart’s Law at work.

Client Expectations

Perhaps one of the best examples of Goodhart’s Law can be summed up in this age-old industry question: “What’s the quickest way to lose weight?” A tongue-in-cheek answer, of course, is “cut off your arm” to instantly reduce body weight by about 10 pounds.

In reality of course the client needs to lose fat in a healthy way. This is where quality often comes before quantity or pace. It is our job as fitness professionals to curb human nature in such a way to create value in the work, focusing on “good” instead of “fast or cheap”.

Smart Goals

No economist would suggest that we avoid creating targets and goals. They are a necessary part of incentive, motivation, and life in general. The “S” in SMART goals stands for “specific”, after all. But understanding this simple concept of economics helps you define tasks and use multiple measures in creating your goals. When fitness pros ignore human behavior, it can ruin a business or exercise program.

To that end, when creating any target, first assess what the main objective really is, understand that it’s ok that not every measure will be perfect, and keep client safety and community culture at the forefront of each decision.