Incentives are the rewards you get for engaging in certain behaviours. They are often created by governments or other organizations to encourage people to act in a certain way, without mandating the behaviour. For example, you may get a tax break if you donate to a charity.
But incentives can also be created unintentionally, and they can have unexpected and negative consequences.
In this case, they can create the opposite effect to the one they are intended to have. Economists call these perverse incentives.
But incentives can also be created unintentionally, and they can have unexpected and negative consequences.
In this case, they can create the opposite effect to the one they are intended to have. Economists call these perverse incentives.
In this episode, Carleton University economist Frances Woolley guides us through some examples of perverse incentives, and how politicians and policy makers can use these anomalies to create better outcomes in the future.
We'll explore how the fields of crime prevention, pest control, and even the dog show circuit, have all provided valuable lessons from incentives that have gone rogue.
Episode Nine: Perverse Incentives | The Invisible Hand with Matthew Lazin-Ryde | CBC Radio http://www.cbc.ca/theinvisiblehand/episodes/2012/08/22/episode-nine-perverse-incentives/
