Showing posts with label incentive. Show all posts
Showing posts with label incentive. Show all posts

Thursday, December 27, 2012

Whose incentive is it?


I went out for fresh coconut water with a colleague. On the way, we saw this.


I told my colleague that this was the best argument for capitalism. She was like – what, how, what was I talking about? The lady brooming the street you see is not a government employee. She is an entrepreneur. She is the lady who sets up a stall in the day selling buttermilk. She typically sells it for the tired and sweaty commuters as well as the office folk who walk out after lunch. And she mixes her buttermilk right there. Since she sells food stuff, she obviously likes the place to be clean. Office goers like to drink buttermilk in a place they assume to be clean and hygienic. She doesn’t want dust flying about. After she finished brooming she splashed water on the street so that the remaining dust settles down as well. She did a good job of keeping her environment clean.
A case of where the government fails miserably while the private sector does a great job free of cost, without prodding. Economic interests dictate human behavior. The sweeper hired by the government has no incentive to sweep well. If had done his job she wouldn’t have had the need to clean the place. But the fact is simple, the way it is structured, the lady has an incentive to clean up and the sweeper has no incentive to clean it. Incentives. We simply respond to incentives.
I was listening the other day to a freakonomics podcast on incentives and children. How you must incentivize good behavior. Some study they did and it showed that kids respond well to incentives. No surprise here. But another interesting thing that a typical parent with a girl will tell you – they found no correlation between incentives and young girls responding. The girls were sweet or behaved because they wanted to and not because they were incentivized. I can tell you from experience and from other parents talking – you can’t really give girls money and ask them to behave. You can’t cut their pocket money for bad things and stuff. We tried a lot of things with Jispa – giving cash, interest and stuff. Nothing worked. She will best respond to emotional blackmail not money. That’s the way sweet girls are. To make her do something I have to make a face not reach for my wallet. Oh lovely girls. They are the best!