I started to reply that you’re totally right but… and then had so many buts that I’m changing my answer!
(Btw, @aleix is using these psych terms perfectly but others may find our old blog post, Negative Reinforcement ≠ Punishment, edifying.)
So I think the part that’s right is that positive reinforcement works better than punishment. But punishment also works amazingly. Loss aversion is powerful. And more to the point, even if you prefer positive reinforcement, where do the rewards come from? Paying the money up front and getting it back unless you derail is a trick – it’s equivalent to getting stung.
At least for me personally, the equivalency would always be at the back of my mind and bug me. Also I like having scary high pledges on some goals and then it would feel especially unreasonable to pay up front. Also-also, most goals are like “get 10k steps (or work 40 hours, or practice piano for half an hour or whatever) per day forever”. It feels inefficient to have money always flowing back and forth for such goals and really muddies the mental accounting as well in terms of how much you’re really paying Beeminder for the motivation it’s giving you.
(Not to mention the laws and accounting involved. We’d be kind of a bank and have revenue that wouldn’t count as revenue. I assume this part would be perfectly overcomeable if we were convinced the psychology / behavioral economics were right though.)
Tangentially related to all this, I have blog post draft called “Paying Is Not Punishment” (see Point-Counterpoint: a possible new blog series) so I need to think about all this more.