A recent study revealed that when an employee's health is concerned, it is better to use the stick than to offer a carrot. 

The study conducted by the University of Pennsylvania in Philadelphia showed that financial penalties are more effective than offering cash rewards if an employer wants to encourage his employees to satisfy physical activity objectives.

This study was conducted under a workplace wellness program. The researchers found out that employees were usually able to meet their daily walking distance when there is a deduction on the amount of monthly reward money computed on the number of days they missed walking.

The employees' response to the walking wellness program is not as good when they are rewarded with cash should they fulfill their required walking schedule.

This study shows that employees manifest a psychological concept called "loss aversion." It means that this mental tendency is a stronger motivator compared to simple financial rewards when it comes to helping employees develop healthy practices.

"We know that people tend to be irrational, but in predictable ways," said Dr. Mitesh Patel, the lead author of the study and an assistant professor of medicine and health care management at the University of Pennsylvania.

"They tend to respond more to losses than gains. This is the way our brains are wired," Patel added.

There were 281 participants involved in the study. They were either overweight or obese and all are employees of the University of Pennsylvania. Their goal was to achieve 7,000 steps per day and their activity was monitored through their smartphones.

They were separated into four groups. There is a control group where no incentives are given, and there is the gain incentive group where each person is rewarded with $1.40 per day if he meets the number of steps.

Group 3 is the lottery eligibility group where each member is rewarded like those in group 2, and group 4, the loss incentive group where each member has a total of $42 at the start, but loses $1.40 for every day that he misses his 7,000 steps.