Incentives

One of the basic assumptions of economics is “People respond to incentives in predictable ways.” This is taught in all introductory economics courses but I feel not enough emphasis is placed on this principle. It basically states that people can persuaded and manipulated if you give them a reason to. Incentives act as a way to influence consumers into acting a certain way.

I have been thinking a lot about this recently and how it relates my aspirations to own my own restaurant one day. By introducing a wide variety of incentives to appeal to a large group of consumers, I can increase the demand for the food I serve. I think having incentives can be the difference between a good business and a great business. I have had a lot of ideas of incentives that would attract consumers to such a business but I am hesitant to share them because I wanna keep my ideas for my future self.

Incentives don’t only exist in the world of economics either. People will respond to incentives in all aspects of life. If a college student is offered free food, they are more likely to go to an event. If a kid is offered candy, they will do more chores. It is a simple concept that is often overlooked. As a society, we focus on how to punish people who do bad things. I think we should focus on rewarding those who do good things more-so than we currently do.

I think a lot of people are good at heart but they don’t see a reason to behave above average because there is no reason to. As a society we should find a way to implement more incentives for citizens who continually show outstanding behavior. Rewarding those who act above average would cause more people to emulate this behavior. Crime rates could go down dramatically if people were motivated to act a certain way.

We know that punishing people causes them to decrease a behavior. This is why we have judges and juries to decide how people are punished for breaking the law. We also know that rewarding people causes them to increase a behavior. So why don’t we have judges and juries decide how to reward people who consistently go above and beyond what is asked of them.

I think it is an interesting thought. Maybe we would see crime go down and the amount of good deeds increase.

 

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