Freakonomics

On incentives

“Incentives are the cornerstone of modern life. And understanding them — or, often, ferreting them out — is the key to solving just about any riddle.”

“There are three basic flavours of incentive: economic, social and moral. Very often a single incentive scheme will include all three varieties. Think about the anti-smoking campaign of recent years. The addition of a $3-per-pack “sin tax” is a strong economic incentive against buying cigarettes. The banning of cigarettes in restaurants and bars is a powerful social incentive. And when the US government asserts that terrorists raise money by selling black-market cigarettes, that acts as a rather jarring moral incentive.”

“A slight tweak [in incentives] can produce drastic and often unforeseen results.”

On asymmetrical information, “conventional wisdom”, and vested interests

“[sins of information]… Most of them involved an expert, or a gang of experts, promoting false information; in each case the experts were trying to keep the information asymmetry as asymmetrical as possible.”

“Working together, journalists and experts are the architects of much conventional wisdom.”

“However created, the conventional wisdom can be hard to budge… “The approved story line about Mr Bush is that he’s a bluff, honest, plainspoken guy, and anecdotes that fit the story get reported. But if the conventional wisdom were instead that he’s a phony, a silverspoon baby who pretends to be a cowboy, journalists would have plenty of material to work with.””

“But we too embrace faulty causes, usually at the urging of an expert proclaiming a truth in which he has a vested interest.”

Misc

“…by the time most people pick up a parenting book, it is far too late. Most of the things that matter were decided long ago — who you are, whom you married, what kind of life you lead. If you are smart, hardworking, well educated, well paid, and married to someone equally fortunate, then your children are more likely to succeed… it’s not so much a matter of what you do as a parent; it’s who you are.”

“”To me, the saddest part of this story is that what he actually did wasn’t enough for him, and he has felt compelled to make up, embellish or take credit for things he didn’t do.””