"for the virtuous person, doing the right thing is incentive enough"

Incentives vs. Virtue


Greensboro, North Carolina, is paying teenage mothers $1 for every day they are not pregnant. Like paying students to improve their grades and test scores, paying teen mothers to not get pregnant appears to be having the desired affect.

The core ideas in these kinds of programs come from a new field known as “behavioral economics.” Classical economics assumes that people are rational and act in accordance with their best interests. Behavioral economics knows that, in the real world, people make bad and even self-destructive choices all the time.

The goal of behavioral economics is to identify the “dizzying array of human foibles” and help policy makers take them into account when shaping policy.

In the case of incentive programs like the ones I have described, it means “nudging” people to act in their own best interests. It’s an approach, by the way, that is favored by a “number of high-level appointees” in the Obama administration.

While basing policy on human beings as they actually are is certainly preferable to basing them on rational “economic men” that exist only in economists’ imaginations (you can count me among the critics on that one).

It doesn’t surprise me that these “nudges” can have a short-term positive effect. But it’s difficult to imagine these programs making a long-term difference.

On the contrary, the “long term damage” mentioned earlier may very well include creating a generation of people for whom incentives will become a necessity, not a nudge.

To put it in Christian terms, incentives will replace virtue. Instead of doing the right or prudent thing because it’s what a moral person does, people will do what they do because they get something out of it. This doesn’t build character—it builds calculators.

What’s more, in the real world, people don’t always reward you for doing the right thing. But there are still consequences for behaving foolishly. How will people raised on a steady diet of nudges avoid these pitfalls?

The answer is that many won’t avoid them because they never learned that, for the virtuous person, doing the right thing is incentive enough.


  1. Missed your comment if there was one.
    There will be long term effects on these kids. Actually, I have sat through a number of presentations at work on generational differences. It is interesting to see what formed each of the generations. My generation, unfortunately, was formed by schools and sports teams awarding everyone, including the failure (in a positive sense of the word) with a reward just for trying.

    Just the other day I heard someone talking about interns. (I am sure this is not unique to my company) The person had made the comment that some interns thought it was their right for the company to pay for their inet service. What?!?! As if any company has any obligation to pay for a service for an employee. And this was formed by parents giving everything and anything their child wanted requiring nothing of the child. Think allowance. Many of my friends got allowance every week even if they did not 'perform'.

    So, I would hate to see what this next generation will be like if we are giving them things in order to make them behave properly.

  2. I did not comment because I wasn't really sure what my best response was.

    I guess that in life I see a reward and consequence system. That's what motivated me to NEVER do drugs. When so many of my friends did drugs, I eschewed because I did not want the consequence of becoming a druggie.


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