Do you believe that money can solve anything?
You’d better read this experiment carefully.
In Haifa, Israel, the economists decided to help the manager of a day-care center which has a problem concerning with the tardy parents that actually they should pick their children up by 4 pm. Very often parents are late thus at day’s end, there will be some anxious children and at least one teacher who must wait around for the parents to arrive.
The economists decided to test their solution by conducting a study of ten day-care centers. It was lasting for 20 weeks. For the first 4 weeks there were 8 late pickups per week per day-care center. In the fifth week, the fine was enacted. It was announced that any parent arriving more than 10 minutes late would pay $3 per child for each incident.
However, after the fine enacted, the number of late pickups promptly went up!! Before long there were 20 late pickups per week, more than double the original average. (Freakonomic, Levitt and Dubner, 2006, page 13-14)
Fantastic research!! wasn’t it?? That’s the prove that money doesn’t solve all problems in this world.
This story is an introduction to the one of the principal economics about incentive. I think, economists’ favorite issue is about incentives. An incentives is a bullet, a lever, or something that trigger something to happen.
In this book, Levitt and Dubner explain what is incentives mean. An incentives is simply a means of urging people to do more of a good thin and less a bad things. But most incentives don’t come about organically. Someone has to invent them.
There are three basic flavors of incentives: economic, social, and moral.
Social incentives are terribly powerful.
Let’s go back to our previous discussion about the day-care center in Haifa. So what’s wrong with the incentive there?
The fee was simply too small. For the price, a parent with one child could afford to be late everyday and only pay an extra $60 each month- the monthly payment of this day-care center is $380- so the fee is no more than one-sixth of the base fee.
The small fee would be seen as to the parents as a signal that late pickups weren’t such a big problem. They can afford it. But how about substitute the fee into $100 instead of $3? That would have likely put an end to the late pickups, though it would have also engendered plenty of ill will. (any incentive is inheritly a trade-offl the trick is to balance the extremes).
Another similar condition is blood donors. In 1970s, researcher conducted a study that pitted a moral incentive against an economic incentive. In this case, they wanted to learn about the motivation behind blood donations. Their discovery: when people are given a small stipend for donating blood rather than simply being praised for their altruism, they tend to donate less blood. The stipend turned a noble act of charity into a painful way to make a few dollars, and it wasn’t worth it.
What if the blood donor had been offered an incentive of $50, or $500, or $5000? Surely the # of donors would have changeed dramatically.
But something else would have changed dramatically as well, for every incentive has its dark side. If a pint of blood were suddenly worth $5000, you can be sure that plenty of people would take note. They might literally steal blood at knifepoint. They might pass off pig blood as their own. They might circumvent donation limits by using fake IDs.
Whatever the incentive, whatever the situation, dishonest people will try to gain an advantage by whatever mean necessary.
Or, as W.C.Fields once said : A thing worth having is a thing worth cheating for!!
Essentially everybody has a chance to do cheating. Anyone!!
Cheating is a primordial economic act: Getting more for less.
Even schoolteacher did it ^__^. They did cheat because of the incentive motive.
It was proven in the Chicago Public School.
The federal Gov’t mandated high-stakes testing as part of the No Child Left Behind law, signed by President Bush in 2002. But even before that law, most states gave annual standardized tests to student in elementary and secondary school. Twenty states rewarded individual school for good test scores or dramatic improvement; thirty-two states sanctioned the school that didn’t do well.
The Chicago Public School system embraced high-stakes testing in 1996. Under the new policy, a school with low reading scores would be placed on probation and face the threat lf being shut down, its staff to be dismissed or resigned.
Those repressing condition caused a terrible situation for everybody: the teachers, the students, parents, etc.
Of course no teacher wanted to resigned their job, however their future life depend on the students’ test score. It lead inevitably to make teacher help student in the test in unethical way. They helped answering the test. They Cheated!!
If economics is a science primarily concerned with incentives, it’s also-fortunately- a science with statical tools to measure how people respond to those incentives. All you need are some data.
Some scientist dealt with those data. They applied the cheating algorithm to the answered test paper. And they found suspicious pattern from those paper. It was looked that some students had some answers same in a row. Did fifteen out of twenty-two students somehow manage to reel off the same six consecutive corretct answers all by themselves?
That’s officially arranged by somebody, wasn’t it?! Finally the scientist found obvious cheating had been conducted by the teacher.
Well…it’s similar with thing happened in Indonesia. That’s obviously showed us that somehow incentive has engendered a chaotic situation. So is that mean we couldn’t use incentive in order to boost up a higher quality of one thing-education for instance.
Actually, I didn’t really sure. But many conditions had confirmed that somehow excessive incentive really a bad option.
Hey people in legislative, you’d better understand about this fact better. It would influenced on how you arrange the policy !!
>>so how it deal with sumo wrestler? next posting, insyaAllah ^^
