Hi everyone! With all this discussion of incentives going on, or something, Jeremy lent me the keys to bring in a view from the economics (and/or non-academic) side of things.
If I were offered the chance to eliminate forever one influence of Econ 101 reasoning from the popular discourse, it would be hard to resist the temptation to spare the world justifications of various policies based on reverse Mary Poppins incentive arguments. That is, there must be a spoonful of medicine to keep peoples’ mitts out of various sugar bowls. [*]
Apart from the one being a joke and one not, there’s not much difference in logic between:
Threatening to slicing off a bit of someone’s toe provides an incentive to stay away from Coldstone Creamery and promotes a healthy diet,
and:
Threatening cervical cancer provides an incentive to stay away from premarital sex and promotes chastity;
the latter being an actual argument floated in some parts of Greater Wingnuttia against vaccination for HPV. [**] The particular annoyance, I suppose, is that the incentive arrangement is often irrelevant in these cases; the religious right may well oppose STD vaccination even if they couldn’t try to argue that it would make society sluttier. This separates these from ordinary disincentive cases such as taxing gasoline to align private and social costs of driving or threatening would-be criminals with time in the slammer.
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[*] Why yes, I did recently watch Mary Poppins with the kids.
[**] As policies, these would likely fail for different reasons. The former is effective-looking but lacks a commitment mechanism for people who don’t have professional torturers shadowing them during Coldstone Creamery’s business hours [***]. The latter is likely to suffer from some combination of bounded rationality and imperfect information.
[***] Why yes, I am reading Gene Wolfe’s Book of the New Sun, an account of the adventures of a journeyman torturer in a far-future dystopia.
2 Comments
But my post was about dieting for altruists. Why does somebody need a committment mechanism to make good on their promise to slice off a teensy little bit of their toe after they go to Coldstone? After all, if I don’t follow through, I don’t give you incentive not to do it again, and I am an altruist after all.
The commitment mechanism is needed because going to Coldstone and not slicing off the bit of toe yields (for “normal” preferences) higher utility than going to Coldstone and slicing off the bit of toe. This would tend to be true if it’s Friend A’s toe and not one’s own, too — Coldstone plus not slicing off the bit of toe is a Pareto improvement over Coldstone plus slicing off the bit of toe. So, I’d suggest that if the threat isn’t enforced, “equilibrium” is everyone goes to Coldstone and doesn’t slice off bits of their toes.
(I also think that you haven’t described a traditional altruism scenario — i.e., Friend A suffers disutility so Friend A’s friend, B, gets greater utility.