The document discusses how incentives and disincentives can be used to influence behavior in predictable ways. It provides examples of using incentives to reduce trash production and increase recycling by changing costs. Similarly, water usage can be influenced by charging market prices for farmers and implementing usage fees for households. Incentives may also work to increase organ donation but could have unintended consequences. Overall, incentives work best when they establish clear property rights, costs, and benefits in order to encourage beneficial behaviors.
The document discusses the concept of scarcity. It defines scarcity as the inability of limited resources to fulfill society's unlimited wants. Resources are defined as human capital, physical capital, land, and entrepreneurship. The goal of economics is to maximize individual and societal welfare given scarce resources. Scarcity requires that choices be made about how to allocate resources.
The document discusses how markets fail to work efficiently when any of the necessary components - competition, information, incentives, and property rights - are missing. It provides examples of how markets perform less efficiently under conditions of monopoly, asymmetric information, externalities, poverty, and discrimination. The key points are that markets will allocate resources less efficiently and prices will be higher if any of the necessary components are absent.
El documento proporciona instrucciones para la instalación de hardware en un gabinete de PC, incluyendo preparar el área de trabajo, instalar la fuente de alimentación, CPU, refrigeración, memoria RAM, tarjetas de expansión, cables, unidades de almacenamiento y arrancar la PC para verificar los componentes.
The document discusses the functions of money and monetary policy. It defines money as a medium of exchange, unit of account, store of value, and standard for deferred payment. It also outlines the four functions of money, different items historically used as money, how the price level is determined, requirements for an effective currency, components of the money supply, and the quantity theory of money. It introduces the Federal Reserve as the central bank that implements monetary policy in the US to maintain price stability and full employment through tools like open market operations and setting the federal funds rate.
The document discusses the concept of marginal analysis and marginal benefit versus marginal opportunity cost. It provides examples of using marginal analysis to determine the optimal amount of an activity by comparing the marginal benefit to the marginal cost at different levels. The document also discusses applying marginal analysis to determine the most efficient allocation of society's resources.
Globalization involves increasing economic integration between countries through mechanisms like free trade, financial flows, and technology sharing. While globalization has increased world wealth, questions remain about how evenly benefits and costs are distributed. Supporters argue it can reduce poverty through growth, but others worry about issues like working conditions and environmental protection when prioritizing open markets over other concerns. Formalizing property rights is presented as key to allowing all people to leverage assets for economic opportunity.
The document discusses benefit-cost analysis and provides examples of its applications. It introduces benefit-cost analysis as a process that involves identifying goals and alternatives, evaluating costs and benefits of each alternative, and selecting the best option. Several examples are given that demonstrate how to apply benefit-cost analysis to decisions like selecting a college, career, or how to allocate a scarce resource like an organ for transplant. The document emphasizes that rational decision making involves systematically considering alternative options and their costs and benefits.
La Unión Europea ha acordado un paquete de sanciones contra Rusia por su invasión de Ucrania. Las sanciones incluyen restricciones a los bancos rusos, la prohibición de exportaciones de alta tecnología a Rusia y la congelación de activos de oligarcas rusos. Los líderes de la UE esperan que estas medidas disuadan a Rusia de continuar su agresión militar contra Ucrania.
The document discusses the concept of scarcity. It defines scarcity as the inability of limited resources to fulfill society's unlimited wants. Resources are defined as human capital, physical capital, land, and entrepreneurship. The goal of economics is to maximize individual and societal welfare given scarce resources. Scarcity requires that choices be made about how to allocate resources.
The document discusses how markets fail to work efficiently when any of the necessary components - competition, information, incentives, and property rights - are missing. It provides examples of how markets perform less efficiently under conditions of monopoly, asymmetric information, externalities, poverty, and discrimination. The key points are that markets will allocate resources less efficiently and prices will be higher if any of the necessary components are absent.
El documento proporciona instrucciones para la instalación de hardware en un gabinete de PC, incluyendo preparar el área de trabajo, instalar la fuente de alimentación, CPU, refrigeración, memoria RAM, tarjetas de expansión, cables, unidades de almacenamiento y arrancar la PC para verificar los componentes.
The document discusses the functions of money and monetary policy. It defines money as a medium of exchange, unit of account, store of value, and standard for deferred payment. It also outlines the four functions of money, different items historically used as money, how the price level is determined, requirements for an effective currency, components of the money supply, and the quantity theory of money. It introduces the Federal Reserve as the central bank that implements monetary policy in the US to maintain price stability and full employment through tools like open market operations and setting the federal funds rate.
The document discusses the concept of marginal analysis and marginal benefit versus marginal opportunity cost. It provides examples of using marginal analysis to determine the optimal amount of an activity by comparing the marginal benefit to the marginal cost at different levels. The document also discusses applying marginal analysis to determine the most efficient allocation of society's resources.
Globalization involves increasing economic integration between countries through mechanisms like free trade, financial flows, and technology sharing. While globalization has increased world wealth, questions remain about how evenly benefits and costs are distributed. Supporters argue it can reduce poverty through growth, but others worry about issues like working conditions and environmental protection when prioritizing open markets over other concerns. Formalizing property rights is presented as key to allowing all people to leverage assets for economic opportunity.
The document discusses benefit-cost analysis and provides examples of its applications. It introduces benefit-cost analysis as a process that involves identifying goals and alternatives, evaluating costs and benefits of each alternative, and selecting the best option. Several examples are given that demonstrate how to apply benefit-cost analysis to decisions like selecting a college, career, or how to allocate a scarce resource like an organ for transplant. The document emphasizes that rational decision making involves systematically considering alternative options and their costs and benefits.
La Unión Europea ha acordado un paquete de sanciones contra Rusia por su invasión de Ucrania. Las sanciones incluyen restricciones a los bancos rusos, la prohibición de exportaciones de alta tecnología a Rusia y la congelación de activos de oligarcas rusos. Los líderes de la UE esperan que estas medidas disuadan a Rusia de continuar su agresión militar contra Ucrania.
The government sector establishes and enforces rules regarding commerce and property rights. It regulates competition and the environment. The government also redistributes income, provides public goods that are non-excludable and non-rival in consumption, and manages the macro economy through monetary and fiscal policy.
The document discusses how changes in supply and demand impact equilibrium price and quantity exchanged in a market. It explains that an increase in supply or demand results in an increase in quantity exchanged, while a decrease in supply or demand decreases quantity exchanged. It also notes that an increase in supply or decrease in demand puts downward pressure on price, while a decrease in supply or increase in demand puts upward pressure on price. The document provides a table summarizing these impacts and gives examples of how to analyze changes in markets.
The document discusses key economic concepts related to supply and demand, including:
1) Relative scarcity is determined by the relationship between supply and demand and is accurately measured by price.
2) The laws of supply and demand explain how quantity and price move in relation to each other.
3) An equilibrium price exists where quantity supplied equals quantity demanded, representing efficient allocation of resources. Price controls can create shortages or surpluses and distort market incentives.
The document discusses the concept of opportunity cost and how every economic decision involves a cost. It provides examples of difficult decisions between preserving environmental resources like desert tortoises and economic activities. It also discusses how decisions are made by narrowing alternatives down to two options - a choice and an opportunity cost which is the best alternative forgone. The document emphasizes that resources are limited and choices must be made to allocate those resources.
Eugenics aimed to improve human genetics through selective breeding. It originated in the late 19th century and influenced policies in the U.S. and elsewhere for decades. Eugenicists believed in the genetic superiority of certain races and forcibly sterilized those deemed "unfit." While discredited after WWII, eugenic ideas influenced fields like psychology and aspects of the modern human genome project continue to raise ethical debates.
1) Macroeconomics investigates relationships between different economic sectors and the effects of changes in variables like consumption, investment, government spending, and net exports. Its goals are full employment, price stability, and economic growth.
2) Inflation is defined as a sustained rise in the general price level. It redistributes purchasing power arbitrarily and distorts price signals. The real interest rate is the nominal rate minus the inflation rate.
3) Economic growth is measured by the annual percentage change in real GDP. Strong growth generates employment while avoiding inflation.
The document discusses how an individual's income is determined by the supply and demand for their particular human capital or skills. It emphasizes that to earn a high income, one should develop skills in areas with high demand but low supply to make themselves scarce in the labor market. Additionally, it outlines how the modern labor market values skills like problem solving, technology use, and lifelong learning due to factors like rapid technological change and global competition.
The document discusses supply and demand determinants of price. It explains that buyers want the lowest price while sellers want the highest price, and that competition regulates prices by constraining both groups. Equilibrium price is reached where supply meets demand, with no shortages or surpluses. Price serves as a measure of relative scarcity between goods.
1) Monetary policy aims to facilitate economic growth through managing the money supply. The Federal Reserve uses tools like adjusting interest rates and reserve requirements to influence whether money growth increases or decreases.
2) Inflation helps borrowers but hurts lenders. When inflation occurs, the dollars repaid on loans have less purchasing power than when they were borrowed.
3) Hard money advocates like bankers preferred the gold standard as it prevented inflation, while farmers and workers tended to support soft money based on silver or paper, as it benefited debtors.
The document discusses the concept of voluntary exchange and how it creates wealth. It explains that [1] when two parties voluntarily agree to exchange goods where each values what they receive more than what they give up, both parties can benefit and wealth is created. [2] It also discusses how the use of money as a medium of exchange reduces transaction costs and makes exchanges more efficient compared to barter. [3] Asymmetric information and lack of information can reduce the benefit of exchanges by preventing both parties from knowing they will be better off.
This document discusses the concept of specialization in production and the law of comparative advantage. It provides examples showing that through specialization and exchange, both parties can benefit even if one party is better at both activities due to lower costs and increased output. The document emphasizes that focusing on areas of comparative advantage allows countries and individuals to gain from international trade.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for recycling or disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options for waste disposal available to a town once its current landfill is full, including building a new landfill, constructing an waste-to-energy incineration plant, implementing corporate responsibility policies, or establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose, considering factors like cost, environmental impact, and encourage reducing waste.
Part two in a series of three: Full of examples of behavioural change that create, or can create, sustainable actions. Includes measurement of success and the name of the corresponding behavioural quirk(s).
We can create and present a tailored presentation for your meeting, workshop, conference, or business.
Gender and Mental Health - Counselling and Family Therapy Applications and In...PsychoTech Services
A proprietary approach developed by bringing together the best of learning theories from Psychology, design principles from the world of visualization, and pedagogical methods from over a decade of training experience, that enables you to: Learn better, faster!
The government sector establishes and enforces rules regarding commerce and property rights. It regulates competition and the environment. The government also redistributes income, provides public goods that are non-excludable and non-rival in consumption, and manages the macro economy through monetary and fiscal policy.
The document discusses how changes in supply and demand impact equilibrium price and quantity exchanged in a market. It explains that an increase in supply or demand results in an increase in quantity exchanged, while a decrease in supply or demand decreases quantity exchanged. It also notes that an increase in supply or decrease in demand puts downward pressure on price, while a decrease in supply or increase in demand puts upward pressure on price. The document provides a table summarizing these impacts and gives examples of how to analyze changes in markets.
The document discusses key economic concepts related to supply and demand, including:
1) Relative scarcity is determined by the relationship between supply and demand and is accurately measured by price.
2) The laws of supply and demand explain how quantity and price move in relation to each other.
3) An equilibrium price exists where quantity supplied equals quantity demanded, representing efficient allocation of resources. Price controls can create shortages or surpluses and distort market incentives.
The document discusses the concept of opportunity cost and how every economic decision involves a cost. It provides examples of difficult decisions between preserving environmental resources like desert tortoises and economic activities. It also discusses how decisions are made by narrowing alternatives down to two options - a choice and an opportunity cost which is the best alternative forgone. The document emphasizes that resources are limited and choices must be made to allocate those resources.
Eugenics aimed to improve human genetics through selective breeding. It originated in the late 19th century and influenced policies in the U.S. and elsewhere for decades. Eugenicists believed in the genetic superiority of certain races and forcibly sterilized those deemed "unfit." While discredited after WWII, eugenic ideas influenced fields like psychology and aspects of the modern human genome project continue to raise ethical debates.
1) Macroeconomics investigates relationships between different economic sectors and the effects of changes in variables like consumption, investment, government spending, and net exports. Its goals are full employment, price stability, and economic growth.
2) Inflation is defined as a sustained rise in the general price level. It redistributes purchasing power arbitrarily and distorts price signals. The real interest rate is the nominal rate minus the inflation rate.
3) Economic growth is measured by the annual percentage change in real GDP. Strong growth generates employment while avoiding inflation.
The document discusses how an individual's income is determined by the supply and demand for their particular human capital or skills. It emphasizes that to earn a high income, one should develop skills in areas with high demand but low supply to make themselves scarce in the labor market. Additionally, it outlines how the modern labor market values skills like problem solving, technology use, and lifelong learning due to factors like rapid technological change and global competition.
The document discusses supply and demand determinants of price. It explains that buyers want the lowest price while sellers want the highest price, and that competition regulates prices by constraining both groups. Equilibrium price is reached where supply meets demand, with no shortages or surpluses. Price serves as a measure of relative scarcity between goods.
1) Monetary policy aims to facilitate economic growth through managing the money supply. The Federal Reserve uses tools like adjusting interest rates and reserve requirements to influence whether money growth increases or decreases.
2) Inflation helps borrowers but hurts lenders. When inflation occurs, the dollars repaid on loans have less purchasing power than when they were borrowed.
3) Hard money advocates like bankers preferred the gold standard as it prevented inflation, while farmers and workers tended to support soft money based on silver or paper, as it benefited debtors.
The document discusses the concept of voluntary exchange and how it creates wealth. It explains that [1] when two parties voluntarily agree to exchange goods where each values what they receive more than what they give up, both parties can benefit and wealth is created. [2] It also discusses how the use of money as a medium of exchange reduces transaction costs and makes exchanges more efficient compared to barter. [3] Asymmetric information and lack of information can reduce the benefit of exchanges by preventing both parties from knowing they will be better off.
This document discusses the concept of specialization in production and the law of comparative advantage. It provides examples showing that through specialization and exchange, both parties can benefit even if one party is better at both activities due to lower costs and increased output. The document emphasizes that focusing on areas of comparative advantage allows countries and individuals to gain from international trade.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for recycling or disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options a town has for waste disposal once its current landfill is full, including building a new landfill, constructing an incineration plant to generate energy from burned trash, increasing corporate responsibility for disposal of products, and establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose for the town.
The document discusses the various options for waste disposal available to a town once its current landfill is full, including building a new landfill, constructing an waste-to-energy incineration plant, implementing corporate responsibility policies, or establishing a recycling depot. It outlines the pros and cons of each system and asks residents to discuss which option they would choose, considering factors like cost, environmental impact, and encourage reducing waste.
Part two in a series of three: Full of examples of behavioural change that create, or can create, sustainable actions. Includes measurement of success and the name of the corresponding behavioural quirk(s).
We can create and present a tailored presentation for your meeting, workshop, conference, or business.
Gender and Mental Health - Counselling and Family Therapy Applications and In...PsychoTech Services
A proprietary approach developed by bringing together the best of learning theories from Psychology, design principles from the world of visualization, and pedagogical methods from over a decade of training experience, that enables you to: Learn better, faster!
Leveraging Generative AI to Drive Nonprofit InnovationTechSoup
In this webinar, participants learned how to utilize Generative AI to streamline operations and elevate member engagement. Amazon Web Service experts provided a customer specific use cases and dived into low/no-code tools that are quick and easy to deploy through Amazon Web Service (AWS.)
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...TechSoup
Whether you're new to SEO or looking to refine your existing strategies, this webinar will provide you with actionable insights and practical tips to elevate your nonprofit's online presence.
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...EduSkills OECD
Andreas Schleicher, Director of Education and Skills at the OECD presents at the launch of PISA 2022 Volume III - Creative Minds, Creative Schools on 18 June 2024.
Temple of Asclepius in Thrace. Excavation resultsKrassimira Luka
The temple and the sanctuary around were dedicated to Asklepios Zmidrenus. This name has been known since 1875 when an inscription dedicated to him was discovered in Rome. The inscription is dated in 227 AD and was left by soldiers originating from the city of Philippopolis (modern Plovdiv).
How Barcodes Can Be Leveraged Within Odoo 17Celine George
In this presentation, we will explore how barcodes can be leveraged within Odoo 17 to streamline our manufacturing processes. We will cover the configuration steps, how to utilize barcodes in different manufacturing scenarios, and the overall benefits of implementing this technology.
Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
- Understand the goals and objectives of the Edukasyong Pantahanan at Pangkabuhayan (EPP) curriculum, recognizing its importance in fostering practical life skills and values among students. Students will also be able to identify the key components and subjects covered, such as agriculture, home economics, industrial arts, and information and communication technology.
𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) Curriculum
Mpp#012+all.about.incentives.(33)
1. for Your
Consideration
People Will Respond
to (.I.=) INCENTIVES
in Predictable Ways.
Lesson 9: Incentives 03/19/13 1
2. An action or policy encouraging
individuals to act in a particular
way by increasing the benefits
of their actions
Lesson 9: Incentives 03/19/13 2
3. An action or policy
discouraging individuals from
acting in a particular way
by increasing the costs
of their actions
Lesson 9: Incentives 03/19/13 3
4. Monetary (.I.=) Incentives
Characteristics
– Freedom to choose
– Inexpensive to administer
– Involves monetary cost
– can cause perverse results, e.g. cheating
Lesson 9: Incentives 03/19/13 4
6. a Situation for your Consideration
Trash Generation
& Recycling
Lesson 9: Incentives 03/19/13 6
7. The Problem
Trash disposal space is scarce.
In many areas, trash disposal has
no monetary cost or no marginal
cost; there is no disincentive to
produce trash.
so people overuse trash disposal
services and space.
Lesson 9: Incentives 03/19/13 7
8. The Solution
Provide monetary disincentives at the
margin for the generation of trash.
For example ~ first container costs $4; the
second container costs $10; and the third
container costs $25.
Sell trash disposal bags as the only
acceptable receptacle for trash for pickup
Allow a market in bags.
Lesson 9: Incentives 03/19/13 8
9. Possible Secondary Effects
people will burn (additional cost) their
trash
people will dump trash in unauthorized
areas (additional cost)
people will create compost (a benefit)
Lesson 9: Incentives 03/19/13 9
10. Recycling
As much as 90% of our trash can be recycled
Costs include the cost of the labor to separate the
waste; the cost of additional containers and the
cost of separate pick-up.
Some of the costs are repaid by the recycling
firm, but usually not enough to provide sufficient
monetary incentives for people to recycle.
Lesson 9: Incentives 03/19/13 10
11. Implementing the Solution
provide (.I.=) incentives to recycle
trash collectors pick up separated recyclables
following the law of comparative advantage the
people will recycle at the trash collection center
there are additional costs involved with recycling
continue recycling as long as the marginal benefits
are greater than the marginal opportunity costs
Lesson 9: Incentives 03/19/13 11
12. The Economist’s Approach
Increase the cost of the “bad” aspects –
e.g. trash production
Decrease the cost of the “good” aspects –
e.g. recycling
Use the law of comparative advantage
Continue the activity as long as the
marginal benefit is greater than the
marginal opportunity cost
Lesson 9: Incentives 03/19/13 12
13. a Situation for your Consideration
Water &
(.I.=) Incentives
Lesson 9: Incentives 03/19/13 13
14. Farmers, Water
& (.I.=) Incentives
Farmers account for 85% of water usage in California
Water is subsidized ~ so farmers pay less than 10% of
the going market rates.
Old watering techniques waste 50% or more of the
water
New watering equipment has a cost (disincentive).
No incentive exists for the farmer to invest in this
equipment because the cost (disincentive) of water use
is so low
Lesson 9: Incentives 03/19/13 14
15. How to Conserve Water
Increase marginal cost of the water used
by farmers (acts as a disincentive)
Result – as the cost of water rises, farmers
will use less water
– Farmers will use more efficient irrigation
– Farmers will switch to less thirsty crops
Institute marginal usage fees for households
Lesson 9: Incentives 03/19/13 15
16. The Economist’s Approach
If water usage in California is a problem
– stop charging a below market prices to farmers
– stop charging a zero marginal cost to households
Recognize that there will be secondary effects
– some farmers are likely to leave agriculture
– other farmers may adjust their procedures by growing
less water intensive crops
Lesson 9: Incentives 03/19/13 16
17. A Situation for your Consideration
(.I.=) Incentives
& Organ Donors
Lesson 9: Incentives 03/19/13 17
18. Addressing the Organ Shortage
People are dying because others refuse
to donate their organs at their deaths!
No incentive other than being a good
Samaritan exists.
What incentives might be introduced to
induce people to supply organs?
Lesson 9: Incentives 03/19/13 18
19. Possible (.I.=) Incentives
for Organ Donors
to pay the donors burial expenses
to pay $1000 cash (or some other amount)
to the family
other inducements
Lesson 9: Incentives 03/19/13 19
20. Possible Secondary Effects
exist for the medical personnel to cut
your life short.
Depending on the (.I.=) incentives your
family members may have incentives to
cut your life short.
The poor may have greater incentives to
donate than others.
Lesson 9: Incentives 03/19/13 20
21. Property Rights
Conserve & Develop Resources
consider your desk
consider your walls at home versus your
walls at school.
consider your dog and your “at home” lawn
versus your dog and the “city park” lawn.
Lesson 9: Incentives 03/19/13 21
22. (.I.=) Incentives to Work &
the Colonial Experience
– @ 1620 - Plymouth Plantation held in common
– One person from each family was expected to
work
– Families were given food according to the number
of people in their family
– It was believed there was gold in the vicinity
– Half the colony died after first winter
– @ 1623 - private property was established
– Then the colony flourished
22
Lesson 9: Incentives 03/19/13 22
23. So if You Want to Provide
(.I.=) Incentives to Produce
~ Establish (.P.=) Property Rights
the “women now wente willingly into
ye field and took their little-ones with
them to set corne, …whom to have
compelled would have been thought
tiranie and oppression.”
Lesson 9: Incentives 03/19/13 23 23
24. Jamestown
Each settler receives the same share of the
crops but not all work.
English “gentlemen” settlers think of
themselves as “above” work. As long as the
Governor exempts them from work they have no incentive
to work.
the Settlers starve
Captain John Smith forces the “gentlemen” to work by
offering very strong incentives.
and the “Starving Times” end
Lesson 9: Incentives 03/19/13 24
25. Discussion Points Review (a)
an (.I.=) incentive is an action or a policy encouraging
individuals to act in a particular way by increasing the
benefits associated with their actions.
a disincentive is an action or policy that discourages
individuals to act in a particular way by increasing the
costs associated with their actions.
the (.I.=) incentives can be both monetary and non-
monetary in their nature.
Lesson 9: Incentives 03/19/13 25
26. Discussion Points Review (b)
Perverse (.I.=) incentives may encourage people to act in
socially undesirable ways.
Trash production can be reduced by increasing the cost of
producing trash. Recycling can be increased by decreasing
recycling costs at the margin.
Water usage can be reduced by charging the full market
price to farmers and by increasing the cost at the margin to
households. One expects there will be secondary effects
some would consider to be negatives.
Lesson 9: Incentives 03/19/13 26
27. Discussion Points Review (c)
Providing (.I.=) incentives for organ donations will
increase the amount of organs available but will have
secondary effects.
Policies meant to encourage people to work can be
effective but they must ensure the secondary effects are
not perverse.
In general, social policy should:
– provide effective incentives
– investigate all secondary effects
– continue the policy as long as the marginal benefits are
greater than the marginal opportunity cost.
Lesson 9: Incentives 03/19/13 27
28. (i) How Do (.I.=) Incentives
& Disincentives Affect You?
Consider your study habits
– Your entire grade is based on the final. How much do
you study before each class?
– You have a quiz every class. How much do you study
before each class?
Consider overtime
– Your boss pays you your regular wage for overtime.
How much overtime do you work?
– Your boss pays you double for overtime. How much
overtime do you work?
Lesson 9: Incentives 03/19/13 28
29. (ii) How Do (.I.=) Incentives
& Disincentives Affect You?
You are being paid $5 for each “A” you get. How hard do
you work?
You are being paid $1000 for each “A” you get. How hard
do you work?
If you fail this test you will have to take it over. Do you
cheat? (And if you’re caught cheating?)
If you fail this test you will be asked to leave CSUSB. Do
you cheat? (And if you’re caught cheating?)
Lesson 9: Incentives 03/19/13 29
30. (iii) How Do (.I.=) Incentives
& Disincentives Affect You?
If you come to class you sometimes get extra credit
points.
If you come to class you get to take the quizzes.
If you stay in class to the end you sometimes get extra
credit points.
If you don’t come to class, you don’t get any of the
above.
Lesson 9: Incentives 03/19/13 30
31. If you want people to do more of an activity then
change the incentives by increasing the marginal
benefit or decreasing the marginal cost of the
activity.
If you want people to do less of an activity then
change the (.I.=) incentives by_____________
Lesson 9: Incentives 03/19/13 31
32. Policy Implications
People respond to (.I.=)
incentives in predictable
ways. Marginal incentives
do work.
Lesson 9: Incentives 03/19/13 32
33. Using (.I.=) Incentives
& Disincentives ~ Design a Policy
to induce teachers to teach well
to induce students to learn in school
to induce able-bodied welfare recipients to go
to work
to induce high school students to care for
classroom furniture
to induce farmers to leave farming
to train people to enter the work force
Lesson 9: Incentives 03/19/13 33