Naked Economics Chapter 2 Summary: Incentives Matter

Posted: January 7, 2009

30-53 Why you might be able to save your face by cutting off your nose (if you are a black rhino)

Theme - Misaligned incentives

53- how is it that a country can put a man on the moon and still have people sleeping on the street?

• Rocket Science vs drug addicts and 16 year old teens
• People seek to make themselves better off, however they may define that.
• Our best hope is to understand why we act the way we do, and plan accordingly.
• Programs, organizations, and systems work better when they get the incentives right.

31 - communal resources VS private property IE “rhino ranchers”

• Rats vs rhinos
• Free riders
• Incentives to hunt rhinos outnumber the disincentives

34- adam smith butcher quote

• Microsoft example
• Berlin wall, east german car company
• India, owned byt the state
  • North Korea

35- dependence on foreign oil & CO2 emissions

36- Adverse Selection

• teacher salaries

36-37 Perverse incentives

• Law of unintended consequences
• Requiring car seats on planes might result in more injuries and deaths to children Mexican smog

38- good use on incentives

• london