← Basic economics

Incentives

People respond to costs and benefits. Make something cheaper or easier and you get more of it; make it costlier and you get less. Not all incentives are money.

Twenty people pick a way to work. Most drive because it is faster for them.

Qualitative toy. Counts are made up.

Takeaway

  • Incentives are everywhere, not just money.
  • Unintended consequences often come from ignored incentives.
  • If a policy fails, ask what it actually rewarded.