Incentives In Steven D. Levitt's Freakonomics
“An incentive is simply a means of urging people to do more of a good thing and less of a bad thing.” This quote from Freakonomics by Steven D. Levitt and Stephen J. Dubner explains why incentives are used in modern society. They are present to motivate someone to make a decision, whether it be a positive or negative one. Many times the average person thinks of an incentive as a term they are not familiar with, or that they don’t use on a daily basis. However, people everywhere use incentives on a daily basis to get what they want, whether they realize it or not.
Incentives have the power to act in different manners depending on what one may want to achieve. For example, positive incentives will motivate someone by promising a reward while …show more content…
Paul Feldman had created a moral incentive when he would lay out bagels for people throughout different businesses and would also have an empty basket with a suggested price to pay for the bagels they took. What Paul found after collecting his earnings was that his collection rate was about 95%, making the majority of his customers honest. When people did cheat from him, he found trends from the data he collected. For example, immediately after September 11th, 2001, Feldman had a 2% gain in payments. He contributed this to the idea that many of his customers were patriotic because of their affiliation with national security. A social incentive can be seen in this very same experiment. The data Feldman collected suggested that smaller offices were more honest than larger offices. He believes that smaller officers were more honest because members would be put under a greater sense of shame if caught stealing. Negative incentives were put in place at a daycare facility when adults continued to pick their children up late. In order to combat late pickups, the daycare facility decided to enact a 3 dollar payment for each day they came to pick their child up late. The daycare service believed this incentive would prevent late pickups but, the number of late pickups rose because a 3 dollar payment was simply not enough
Incentives have the power to act in different manners depending on what one may want to achieve. For example, positive incentives will motivate someone by promising a reward while …show more content…
Paul Feldman had created a moral incentive when he would lay out bagels for people throughout different businesses and would also have an empty basket with a suggested price to pay for the bagels they took. What Paul found after collecting his earnings was that his collection rate was about 95%, making the majority of his customers honest. When people did cheat from him, he found trends from the data he collected. For example, immediately after September 11th, 2001, Feldman had a 2% gain in payments. He contributed this to the idea that many of his customers were patriotic because of their affiliation with national security. A social incentive can be seen in this very same experiment. The data Feldman collected suggested that smaller offices were more honest than larger offices. He believes that smaller officers were more honest because members would be put under a greater sense of shame if caught stealing. Negative incentives were put in place at a daycare facility when adults continued to pick their children up late. In order to combat late pickups, the daycare facility decided to enact a 3 dollar payment for each day they came to pick their child up late. The daycare service believed this incentive would prevent late pickups but, the number of late pickups rose because a 3 dollar payment was simply not enough