Incentives

Economics is the study of incentives. Incentives motivate a person to act in a certain way. There are three types of incentives moral, social and economic. Morality represents how we would like the world to works, while economics shows how the worlds functions. In Freakonomics, Steven D. Levitt expresses the idea incentives can make a person act against their moral principles through several examples including teachers cheating on standardized test, Feldman’s bagel service, and Internet dating services.

Teachers are pressured to produces classes with children who receive high scores. An experiment was conducted and several teachers raised their students cores were analyzed by machines to search for suspicious answer patterns. The cheating teachers students had strings of similar answer patterns. The teachers suspected of cheating were forced to re administer their test and all the student’s scores went down. “With high stakes testing, a teacher whose students test poorly can be censured or passed over for a raise or promotion,” (23). Cheating teachers are never looked for under normal circumstances. A teacher can go about cheating by changing students answers, writing the answers on the board, giving students extra time and by giving students hints, or obtaining test material ahead of time to prepare them with an advantage. In this situation teachers acted against their moral principles because the reward of cheating was tempting. Some teachers do not realize cheating is detrimental.

Another example of how people respond to incentives is Feldman’s bagel company. Feldman delivered 8,400 bagels a week to 140 companies. At each location Feldman left a drop box for money. Each person was supposed to pay one dollar for a bagel with cream cheese. Some people thought to themselves, I will just take a bagel and no one will notice. One intriguing statistic Feldman noticed was “the same people who routinely steal more than 10 percent