Incentives
If economics is about satisfying needs and wants…
People have to do things to satisfy those needs and wants.
Incentives are how we get people to do those things.
Basically, why we do the things we do.
Incentives can be positive or negative.
Positive incentives reward or encourage people to do something.
Negative incentives punish or deter people from doing something.
Incentives are meant to influence behavior! It’s important to separate the incentive from the behavior.
For example, studying for a test is not the incentive, it’s the behavior. Doing well, good grades, making your parents proud … are the incentives (reasons) to study.
For example, income taxes are not incentives. They are not meant to punish you for making money, it’s just how we pay for things collectively.
A soda tax, however, is an incentive. It’s designed to get people to drink less soda.
And not every good or bad thing that happens to you is meant to influence your behavior. If you find a $20 bill on the ground, it wasn’t necessarily put there to encourage you to look at the ground. It might just be luck.
Monetary Incentives
Money (or equivalent) used to influence behavior
Positive examples:
write 3 more examples…
Negative examples:
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Non-Monetary Incentives (social, moral, etc.)
Ideas of right vs. wrong, pride vs. shame, respect vs. ridicule, that influence behavior
Positive examples:
write 3 more examples…
Negative examples:
write 3 more examples…
What motivates you?