In a recent email conversation with some other economists we realised that sometimes people get upset when we talk about people following incentives – as it makes them sound harmless. Within the conversation I discussed how this was due to the different ways economists and non-economists interpret the word. My email went as follows:
It could be that people confuse “following incentives” as “making a conscious choice to hurt others”. There are three key differences:
- The incentive we are discussing is at the margin and conditional – the other “good” factors matter, but holding those constant the incentive has an impact at the margin
- Not all decisions to follow incentives “hurt others” – in fact the vast majority don’t
- And adding to those two is the way we use beliefs and how our unconscious mind functions – often it changes our subjective perspective of and beliefs around things to make doing actions in your personal interest seem more palatable for your conscious mind. This made sense in an evolutionary sense, as people that were able to ensure the survival of their genes in “good conscious” were more likely to actually survive. Of course it gets more complicated than that – but it seems consistent with observation and evolutionary game theory.Of course, stating this would just make peps look at us funny. Maybe I should put it up as a blog post?