David Henderson recalls his first class with Armen Alchian in 1972, who started class noting that if someone understands the incentives they can understand a lot of ‘mysterious’ behavior.
“On the first day of class he said when we went to the bookstore we’d be in a long line and we’d be angry about that. But we shouldn’t be. We should be happy because it means economics works. The people working are on a standard wage and they don’t have a strong incentive. There’s no ownership, no one gets a big benefit if they do better.” – David Henderson, September 2021
We should be happy to wait? Kinda.
One theme around here is the value of curiosity. Mostly that means to wonder how and why and when things happen – or even when they don’t happen. And incentives are ripe for thought.
We’ve looked at prediction incentives, Marine incentives, and the incentives of salting roads. There’s music incentives, be careful what you count. And football recruit incentives, more careful counting.
Incentives come up so much because one way to be curious is to ask: why does that happen? and part-of-the-reason that happens are the incentives.
This kind of curiosity takes work. Like exercise takes calories, crypto (or cars) take gas, or relationships take conversations – curiosity takes work. To be curious is to think, wonder, and ask questions. To be curious is to move past the simple story and see what else is there. Sometimes there’s not more, sometimes there’s incentives, and sometimes there’s something unexpected.
One of the highlights of my interneting has been writing a post about curiousity for Ribbon Farm.