The Trouble with Incentives


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Human beings are complex. It is difficult to predict their response to incentives. Today’s needull is a review of the book – The Moral Economy: Why Good Incentives Are no Substitute for Good Citizensby Samuel Bowles.

According to legend, when the father of modern Greece, Ioannis Kapodistrias, attempted to address the malnourishment of his people by importing and freely distributing potatoes, the Greeks roundly rejected his offer. Heeding Laocoön’s ancient wisdom, the people of the Peloponnese knew better than to trust a Greek bearing gifts. As the story goes, Kapodistrias responded to the people’s refusal to accept the potatoes by unloading a shipment on the streets of Nafplion and instructing his soldiers to pretend to stand guard. The untrusting Greeks would not accept free potatoes—if they are free, something must be wrong with them—but were more than happy to steal provisions so important they needed to be guarded by the army. Kapodistrias’ ploy worked, and potatoes soon became a staple of the Greek diet. In Nafplion, the offer of free potatoes did not stimulate demand. Nor did the threat of punishment deter theft. Instead, the threat of punishment communicated the value of the potatoes. If something is worth guarding, it is worth stealing, and the Greeks responded to the new information by stealing more.

The complete article

Dimitrios Halikias – The New Rambler

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