One of the fundamental ideas in Freakonomics is that “Incentives are the cornerstone of modern life” (p. 11) and, in a further elaboration, that “There are three flavors of incentive: economic, social, and moral” (p. 17).
In terms of explaining human behavior, which of these incentives do you consider most important?
How are these used to explain the many forms of human behavior outlined in the book?
Tuesday, May 27, 2008
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I believe that the moral incentive is the most important out of the three. Although the economy is a very important aspect of everyones lives, morality is what keeps the world as honest as possible. The social incentive would be the least important to me personally; that could be my choice soley on my age, however, I believe that even though people live their lives trying not to hurt others, we dont really lose very much sleep at night.
This brings me back to my original point however, morality is a key factor in why we DONT hurt others. We naturally feel bad after hurting someone else's feelings and/or physically harming someone else. "Freakonomics" says all three "incentives" keep the people around us honest, though when i sit back and think about it MORALITY controls both economic and social incentives.
I disagree with Levitt's approach in separating moral and social incentives. Moral reasoning is set through social learning and social constructs (such as church, family values, etc.). These moral constructs can only be understood within the social context. They do not exist outside the social context.
Moral incentives work because there are some social incentives (or consequences) associated with choosing that moral position or behavior. For example, women living under Taliban rule are required by moral law to cover themselves completely. That moral law is instituted by people living in that society. Women who morally disagree with this moral law will be sanctioned by the society.
Alternatively, I would list the incentives as:
1) Economic (or incentives that help us survive, gain access to resources, are logical in the sense that they produce some benefit to the individual)
2) Social (incentives that keep us connected to others, our tribe, our family, or social group, all which help individuals survive).
Consider this recent report in Science that discusses the difference between self-motivation (economic gain) and moral motivation (altruistic gain, helping others at one's own expense).
http://www.sciencemag.org/cgi/content/full/320/5883/1605
Notice how moral decisions are often explained by the social connection between people. Moral concerns involve the consideration of how your actions relate to others. I believe that this summary of human decision making and the interplay of economic and moral reasoning strengthens my point that moral actions, at their core, are social actions.
I think that there's a catch to Levitt's approach. If you think about it the economic, social, and moral incentives are all held up by one another. For example, why does someone make money or worry about money in the first place? Sure they want to be prosperous to survive, but any money beyond that is made to buy unnecessary things or material possessions. The weird thing about the modern day society is that we feed primarily off of this social incentive. The wanting to be like everyone else or the wanting to be thought highly of.I mean in essence that is why the majority of people attend college in the first place, to obtain a degree, become prosperous, and obtain respect. The prosperity is the economic incentive and without the social incentive the economic incentive,for the most part, wouldn't be so important. Now where does the moral incentive come into play with my "trinity" proposition? The moral incentive is the foundation of the economic and social incentives. Without money we feel lowly and unsuccessful, without respect from peers and status you feel left out and at the bottom of the food chain. In essence all of these incentives become one. Its kind of a trick question.
Well I want to make money so I can become batman...
Social incentive seems to take priority. People don't want to be called out. I think that this is more prominent in smaller, more tight knit groups. When people know each other better they tend to make fun of each other more, or at least are more ready to point out someones mistakes to them. So in the book they mention that the smaller offices tended to steal bagels less. In that enviorment someone wouldn't want their friends to think of them as a theif. Also,I think that to measure the effects of moral incentives you would have to observe how people act in private. I think that a moral incentive has more to do with ones own integrity.
I must respectfully disagree with Dan Richard's contention that moral incentives and social incentives are inseparable. While both are closely interconnected there are noteworthy differences between the two. Morality is the means by which an individual views the world while social incentives are based upon how the world views the individual.
An individual has the choice to either follow the demands of his society or rebel against them. A murderer, for example, has a much more different moral code (one could argue that he has no moral code at all) than the innocent victim. This is where the social incentive comes into play. A social incentive seeks to make up for what it perceives to be a potential deficiency in a person's moral code. In our example, that would be prison or capital punishment for the murderer. Yet as we all know, social incentives alone are not enough to quell murder, because it is an *outside* influence, not apart of the individual. The individual has the free will to either commit murder and rebel against society or follow the demands of society. If the potential murderer chooses to follow the law, than it does not necessarily mean that he feels morally inclined to not murder. In this example, social incentives acted as a safeguard for society against individuals who have a completely different (or lacking) moral incentive than their peers.
This is not to say, however, that social incentives do not have the ability to impact one's moral code. The manner in which a child is raised, the religion which he follows, as well as his surroundings in general give him the opportunity to shape his moral perception of the world around him. How he chooses to *interact* with that social landscape is what develops his moral code and the reason why so many people living in the same social conditions are unique and not merely replicas of each other.
I would also contend that the reason why social and moral incentives seem to be indistinguishable is because in our society, they appear to be in harmony. It is not until one makes a just or unjust rebellion against societal norms that the difference is readily noticeable.
I would think that the economic incentive is the most important. As much as we think that we act on our morals and beliefs and always do what is right versus what is wrong, we really don't. A lot of the things people do is for money.
Levitt uses sumo wrestling as one of his main examples. Sumo wrestlers have great respect for themselves, each other, and their country. To cheat in such a respectful sport is outrageous. The ones who let the others win, they aren't doing it to make themselves better, or to clear their conscience. They are simply doing it because they have nothing to lose and they will still be getting paid, unlike the losing wrestlers.
We are driven by our morals to do what is right, but not sadly, that is not how our world actually works. People go through so much to try to make more money, and once you reach a content amount, suddenly, it's not enough and you start wanting more. Right then is when one wants to be morally, and socially, accepted, but to do so, must have more money. One's morals start to change from donating money to charity to saving up money to buy a new car. Their idea of a right thing to do slowly changes and before you know it, it's too late to go back. Economics is what steers our world today.
I have to disagree with what Jackie W. said.
The economy is not the major incentive. Does it play a major role? Of course! but then again, so do all of the three.
However, I would say that the example she gave is more of a moral example than an economic one.
For instance, the economy changes. Gas prices rise, food prices rise, and the ultimate cost of living rises. Sadly, our weekly, bi-weekly, or monthly checks don't rise with the cost of living - not immediately to say the least. So what now? Now we are forced to come up with money we did not originally have. We are effected by the economy.
However, consider the sumo wrestlers. They make millions and if not that they are certainly not struggling. The changes in the economy do not bother them in the least. Yet, they still want more money. Why? I would say that people who would do anything to get more money that they don't really need are not suffering from economic incentives but are suffering from the love of money (greed - a moral issue).
I am certainly not saying that one should hate money, but to love it certainly will not do.
"For the love of money is the root of all evil."
I can agree on the fact that people do not always do the right thing - morally concerned or not.
However, one would also have to consider the fact that morals tend to change from person to person.
The question to ask would be: which person has the right morals?
After that question is asked and answered, it is still up to the individual to do the right thing; and as stated early, we don't always do that.
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