Economists respond to incentives
Here’s my short take, following on Barbara’s post Wednesday, on economists:
1. The single most valuable and durable lesson of economics is that incentives matter. Monetary incentives don’t always matter more than other motivations, and sometimes people’s behavior regarding money is a little nutty. But as an organizing principle for a social science, incentives matter is pretty good.
2. Economists respond to incentives, too. Real and potential financial awards affect what they choose to study, how they go about it, and what conclusions they draw. This doesn’t mean all economists are evil sellouts. It means they’re human beings.
3. For people who purport to believe that incentives matter, economists can be strangely touchy when anyone brings up point No. 2.