Friday, December 3, 2010

Economic theory

A while back a friend gave me a book called Freakonomics. Maybe you've heard of it. Apparently there is a spinoff radio show, and I heard that they even made a movie a while back. The premise is this: economic modeling - which is essentially evaluating data to determine cause and effect relationships involving human decision-making - can be used to consider any human action or desired action and thus modify our social structure to encourage or discourage said behavior. The idea is fundamentally applied behaviorism: humans respond to incentives, either positive or negative, so if you wish to understand or predict human decision-making, all you need to do is determine what the incentives are. It's a fascinating read, though nearly the whole of the book was off-colored in my mind by something that I read near the beginning.

There was this problem with a preschool wherein every day at least one parent would be late to pick up their child, resulting in extra (unpaid) work for the preschool staff. To discourage the behavior, the school instituted a $3 fee for every incident. The result: a significant INCREASE in the number of late parents. Levitt's (the author) conclusion was that the moral/social incentive was greater for the majority of parents than the meager 3$ monetary incentive. Perhaps the school might have had more luck by charging more, maybe $20 per incident? But then they would have risked driving clients away to other preschools without a charge. This situation raises my first thought: for most people, intrinsically human motivations, based on social expectations or morality, are significant, but also require a level of personal responsibility. In other words, most people inherently impose greater consequences on themselves than they are willing to accept from another party.

Here's where the story gets really interesting though. After a few weeks of this failed experiment with a financial penalty for tardy parents, the school removed the fee, hoping that the situation would return to normal. What did they find? Parents continued to be late exactly as they had been with the $3 fine. Apparently, they learned that tardiness was only a $3 inconvenience for the school, and thus they felt less inclined toward responsibility than they had when they were simply responding to their internal/intrinsic social obligations. So here is where my 2nd thought emerged: by imposing a contrived motivational scheme, you insert an artificial valuation on a thing that sticks with it.

Here, is another idea - one that is widely accepted as true: as a species we are successful in large part because of our social nature. Humans are inherently driven toward social interactions. Any real despair is invariably linked to some sort of social/emotional isolation (loneliness). Death of a friend, divorce, failure at work, etc., all carry with them a sense of separation or alienation and thus, loneliness. 3rd thought: So if we value social connection so much, whether consciously or not, we will therefore prioritize the values necessary to maintain our connections. This is a very strong motivation, and one which often transcends material or monetary incentives. We are doing society a disservice if we substitute something artificial and material.

4th thought: people no longer take responsibility for their choices once the consequences for those choices are imposed for them externally, even if that valuation is removed. This is particularly the case when the natural motivation, one that is subconsciously imperative, is replaced with something wholly contrived and lower-order in significance. When we construct a system of regulation where inherent morality could be used, we run the risk of disempowering people; removing from their conscience the need to self-regulate.

5th thought: rather than regulate, perhaps there might be a means to alter the value system of a community, such that behaviors that are undesirable to neighboring communities can be replaced with an intrinsic moral tendency.

6th and final: Since I am an educator by profession, I can't help but think about this through that lens. Grades. Let's assume that as educators we work to create and maintain a culture of learning, wherein it is socially expected that members of our community engage in a disciplined process of discovery. But then, we institute an artificial incentive scheme involving something that is at best highly subjective and at worst somewhat arbitrary - the assignment of abstract symbols representing some degree of aptitude as determined by variable metrics. What do you think the result might be? Maybe students, instead of engrossing themselves in the process of intellectual and personal development, as humans can so readily do, focus their attention on satisfying the structures and desires of their instructors. Perhaps students give up responsibility for their own process in favor of the administered incentive scheme. Maybe students resent the assigned tasks or even fail to see their value beyond appeasement of the governing authority. Maybe those students' ability to think for themselves suffers as a result.