Last week with Sandel, people picked up on some topics – mostly paying kids for good grades, bribes for losing weight, a little bit of immigration, and a little bit of cash for sterilization. There was also some discussion of fines versus fees in relation to Finland and Bieber, as well as other topics.
I want to reintroduce (with the same numbers) topics largely undiscussed in case you would like to chime in on them this week before introducing a few other thoughts.
7. tradable procreation permits
8. tradable pollution permits
9. carbon offsets
10. endangered rhinos
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Okay, last week I also emphasized these two features from the chapter:
(A) Economic thinking involving incentives does not explain certain behavior, and in fact, gets certain behavior exactly backwards.
(B) There is a difference between fines and fees.
Here are two more for this week:
(C) The realm of economics has expanded from previous historical times to cover not just topics of societal output for market economies (inflation, unemployment, interest rates, standards of living, etc.), but into the realm of human behavior itself. See pages 84-85.
(D) “At the heart of this science (economics) is a simple but sweeping idea: In all domains of life, human behavior can be explained by assuming that people decide what to do by weighing the costs and benefits of the options before them, and choosing the one they believe will give them the greatest welfare, or utility. [next page] If this idea is right, then everything has its price” (48-49).
Here is one way to understand how Sandel approaches these claims. By extending economics into a “science” of human behavior, economics reduces all human motivations to cost-benefit calculating incentives. Hence, on this line of thinking, social problems (like all the ones we’ve been talking about) just need to be incentivized in the right fashion. That’s the market solution.
Can you discuss or analyze why this reduction of human motivations to economic incentives is either (a) incorrect or (b) problematic according to Sandel? What do you think about it?
I want to offer one more piece of outside support regarding the idea that such thinking about incentives is, in fact, incorrect. This very short article from the Harvard Business School, which includes a link to the research study, suggests that paying people more for a task DOES NOT yield higher productivity or harder work. Other motivations do. What do you think about this study called (with a pretty great title): “When 3 + 1 > 4″? I’m also placing the study under our course page.