Freakonomics Chapter1

Chapter 1 of Freakonomics focuses on the beauty of incentives. It asks the question “What do teachers and sumo wrestlers have in common?” The answer is that they both

The author Steven Levitt studied economics at Harvard University and MIT. He is primarily known for his work in the field of crime. The title Freakonomics means a study of economics based on the principles of incentives. The title is related to the book since he emphasizes how incentives drive and affect people’s actions. Although this book does not have a single theme, the main focus of the book is a new way of interpreting the world using economic tools. He explores incentives, information asymmetry, conventional wisdom, crime and abortion, and parenting throughout the six chapters of the book.

In chapter 2 of Freakonomics the main argument is that the absence of information can be used for personal gain. The main example used to display this tactic is when the KKK is compared to real estate agents. Although the crafty practice of real estate agents is in no way similar to the horrors of the KKK, they have a distinct similarity when it comes to the hoarding of information. The majority of the chapter focuses on the history of the KKK and Stetson Kennedy’s effort to stop it through the infiltration and exposure via radio of the Klan. Since the Klan was dependant on their violent—despite not being extremely violent—reputation, the disclosure of the information they had withheld from the public rendered them powerless. The narrators

* Incentives-a promise of a reward in the future, as a result of particular behaviour or achievement-the element of ‘if…then’.

Previously said, the first chapter of Freakonomics best demonstrates the format of each chapter. Because of that fact, it is also the most effective in analyzing Levitt and Dubner’s central argument of that data holds the power to unveil new truths of the world. To start the argument on the similarities of teachers and sumo wrestlers, the authors, following their format, begin by establishing the foundation of this chapter: incentives. They describe incentives as “a means of urging people to do more of a good thing and less of a bad thing” (Dubner and Levitt 17). And using several examples including experiments on late fees in day cares and small stipends for blood donations, the authors ensure that the reader understands the full effect of incentives: they explain the differences between the three types of incentives, their applications in daily life, and the possible adverse effects of switching between two types of incentives despite any initial positive intentions. The authors

In the book Freakonomics, Steven Levitt and Stephen Dubner note “An incentive is a bullet, a lever, a key: an often-tiny object with astonishing power to change a situation” (16). This is to showcase the amount of power an incentive can have over a person or a situation; either good or bad. Humans are found to use incentives when it comes to making daily decisions. Often, people need motives to proceed with their plans. Some tend to make either moral, social, or economic incentive. The moral incentive is about self-respect; keeping in check with what was taught to believe is right and wrong. The social incentive is how the public views the person; wanting to look good in front others. Economic incentive, however, would relate to monetary benefit. While all three incentives can affect people’s decisions, economic

In its essence, an incentive is a deliberate proposal calculated to make a person choose a certain action. Thus, the reason why incentives are so popular in society is because everything and

An incentive can be that completing a goal will get you something or some sort of outcome that has been desired but unreachable up until that point. There are four types of incentives that relate to the work place. There is the compensation incentive, which tends to relate to money, meaning this could be a raise or a promotion or anything along the lines of financial gain. There is also recognition incentives which tend to include praises and congratulatory pat on the backs by people surrounding you at work, but mostly those of a higher level then you. Then there is the reward incentives, these are basically prizes given for doing an excellent job, this could be a gift card somewhere, or a free lunch, or any time of added bonus or present. The last incentive applied to employees when it comes to their jobs is the appreciation incentive, this includes company paid events, perhaps the annual Christmas party, or faculty mixer. All of these things are incentives for employees to work harder at work. At Henrys plumbing and Pumps, incentives could include Henry offering to buy the group lunch after a long day, or throwing a barbeque at the end of each month to show the staff that he appreciates the work that they

Incentives in Organizations Author(s): Robert Gibbons Source: The Journal of Economic Perspectives, Vol. 12, No. 4 (Autumn, 1998), pp. 115-132 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/2646897 Accessed: 26/03/2009 10:39

The article titled Why Incentive Plans Cannot Work by Alfie Kohn was very interesting. Rewards offer temporary compliance that can ultimately destroy relationships among employees. It hinders the ability to manage a company. It creates short-term success and does not mean long-term commitment. In this, I find that incentives do not alter the attitudes that underlie behaviors. Incentives hinder creativity and create competition. I concur that incentives also undermine interest.

When it comes to motivating employees, sometimes it’s a bigger task than it seems to be. Many companies need their employees to be motivated for many reasons, it could be to provide the best work for the company, or it could be to keep a senior level employee with the organization. Having a first hand look at how giving incentive pay to employees can increase motivation and work output, I believe this is key to providing a workplace that someone not only wants to be a part of, but looks forward to coming to. Incentive Pay can be broken down into three parts, why a company would give incentive pay in the first place, options for individual incentives, and the different group options. Incentive pay encourages hard work, and hard work brings success to all companies.

As Thorpe and Homan (2000), the role of incentive pay in employee motivation nearly sets up on psychological theories. Locke and Latham (2004) define motivation as internal factors that impel action and to external factors that can act as inducements to

There are various types of incentives, not only material also intangible and expressive incentives (cite[195]{leighley1995attitudes}). This may lead to ambiguous responses if they interact with subjective feelings and desires.

In any organization implementing employee incentives will only make the business flourish. An incentive is something that motivates an individual to perform to the best of their ability. Using incentives to motivate the employees can create a successful business, but it has to be done properly. In fact, employee incentives relate to positive reinforcements because if an individual gets rewarded for performing a task efficiently, then they are more likely to repeat that task again. Some people believe that money is as the only incentive to motivate employees, but that is incorrect. Money can only motivate employees when a task is simple and does not require conceptual, creative thinking. (YouTube) Consequently, money does not always influence individuals and may create an even bigger problem. According to the book, “An important principle is that the stronger the incentive intensity, the stronger the motivation, but also the greater the chance that there will be unintended, undesirable consequences.” In other words, if there is a giant cash reward in play, this will increase motivation of all employees, which may lead to an unfortunate result because the employees will become stressed out.

Firstly incentives work as psychological stimulant for a person to perform better. Incentives act like the pot of gold at the end of the rainbow.