A Brief Introduction to Incentives

Incentives play a key part in economics, psychology, or any field concerning praxeology (the study of human action). The initial rule to understand is that humans (as well as most other organisms) respond to incentives and disincentives. The clearest analogy of this is the carrot and the stick. A mule will walk towards the carrot (the incentive) and away from the painful stick (the disincentive). When seeking employment, people will accept a job that offers high pay, quick commute time, flexible work hours, and benefits. All of these are incentives. In friendships, people will seek a friend that provides incentives to maintain a friendship. Good friends will return favors, will care, and will be enjoyable around. Each of these are incentives to remain in the friendship. Even giving to charity and helping the poor have incentives. You might give to charity for the feeling of virtue. You might help because the well-being of the poor has a higher value to you than the money you’re giving. But an apathetic pathological narcissist will not give to the poor, because there is no personal incentive to do so.

Incentives are a part of natural selection. Any species without a structure of incentives will surely go extinct. Pain itself is a disincentive. If an organism experiences pain, it will begin to avoid the environmental factor that created the pain. Pain assists in self-preservation. Since natural selection chooses the most capable of survival, organisms that avoid disincentives like pain are more likely to exist. Organisms that travel in packs also follow incentives. Organisms in packs that can practice self-sacrifice to save the pack as a whole have an incentive to do so. A species that holds an instinctual incentive to value the pack over the individual will be more likely to survive. Self-sacrifice does not indicate a lack of incentive. If it is for a just cause (from the organism’s perspective), then there remains an incentive to preserve the greater cause of more value than the individual’s life (again, from the organism’s perspective), then this is an act of incentive. But what of acts of suicide without a sacrifice to a cause? While irrational and not in the individual’s best interest, it is an escape from disincentives.

While it is theoretically possible for organisms to exist that do not follow incentives, the need to respond to incentives in reality would prevent such organisms from ever surviving on a distinguishable level.

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