Incentives

by Nikki Bleil

Imagine this: everyone that attends every single class gets an A. No questions asked. Without a doubt, I will see you next to me in class everyday. Incentives are (in economics) “factors which provide a motive for a particular action or give a reason for the action”. Look at a couple of the examples and think about whether or not you will be attending class everyday in the fall semester… if this were really the case!

The real reason for coming to class everyday should be because you want to learn as much as you possibly can, you want to be the best you can be. This can be considered a moral incentive. A moral incentive is when “a particular choice is widely regarded as the right thing to do, or as particularly admirable, or where the failure to act in a certain way is condemned as indecent. A person acting on a moral incentive can expect a sense of self-esteem, and approval or even admiration from his community; a person acting against a moral incentive can expect a sense of guilt, and condemnation or even ostracism from the community.” Simply meaning, you do it because you know you are supposed to and want to. Going to class everyday gives you a sense of mental peace. Think about how good you felt walking out of Economics today…you actually went to class! It was the feeling that you were supposed to have every Monday, Wednesday, and Friday after 2:50PM. Just think about if your mom knew how many classes you missed…would that make you feel good about yourself (considering you have some type of morals)? No, not at all. Moral incentives are the variables that help us make decisions in everyday life, whether to do the right thing and feel good or do the wrong and feel bad. So think about it!
Think about this scenario…everyone that attends class everyday gets a portion of their tuition back at the end of the semester. Once again, you will definitely see me there! This type of incentive is called a remunerative incentive. A remunerative incentive is when a person “can expect some type of reward, especially material (money) in exchange for acting a particular way”. I don’t know of anyone who would refuse this offer. Of course, if a person did not care about the money, I’m sure that the outcome would be different. The student may look at it as going to class everyday, therefore learning (hopefully!) and making the best of the situation, plus getting the money. That’s how I look at it. It may not be the smartest thing for the university, but, hey, people are in class! But in all actuality, the person is there because in the back of all their thoughts lie that one motive…cash in your hand. Now it is not because of the A, it is because of the money.

Moral and remunerative incentives act as indicators for how people act, what decisions they make, and how they decide to make the decision. Point blank, the more appealing the incentive, the more likely he or she is to follow through with the decision.

http://en.wikipedia.org/wiki/Incentive
http://www.merriam-webster.com/dictionary/incentive