Many, of course, see incentives in economics (or anything in economics) as boring.
Maybe so. But do not be fooled: The application here is massive.
You see, people respond to incentives.
It governs and drives every single thing that we do.
Do you think West Texas farmers grow cotton for San Francisco trust-fund babies out of the kindness of their heart?
Do you think San Francisco trust-fund babies design software for West Texas farmers out of the kindness of their heart?
Did you go to college without an incentive?
Did you get up and go to work today without an incentive?
Of course not.
Bonus: Here are three reasons that designing public policy around incentives is so hard.
Incentives are the reason you go to work on days when you’d rather stay home or the reason you’re playing hooky right now. Why
you paid to get into this museum instead of sneaking in—right? And why the fine folks at the Department of Motor Vehicles take their sweet, sweet time: I’ll just take my auto registration business elsewhere! Oh, wait. Incentives are shorthand for the relationship between benefits and costs, which attend every choice you make.
-Peter Leeson, WTF?! An Economic Tour Of The Weird
