#20, Incentives

"People respond to incentives."

-Steven Landsburg

Incentive: something that incites or has a tendency to incite to determination or action.

Incentives shape nearly all aspects of our life.  Incentives are something that cause people to act in a particular manner.  The incentive to study is to get good grades.  The incentive to get good grades is a feeling of accomplishment (or avoiding punishment from parents).  The incentive to show up to class on time is to avoid having to give a late speech.

If PEAI offered an iPad 2 as incentive for getting a 20/20 on the next vocabulary quiz, nearly all PEAI students would get a 100.  Incentives are more than merely material prizes though.  Incentives can take the form of pyschological benefits as well.  Let's take a simple example from our daily lives.  Imagine you are standing in a subway car next to an elderly lady.  The subway car is full and there are no seats available.  After a few stops, a seat opens up in front of both of you.  There is incentive to sit down, comfort.  There is also incentive not to sit down, the positive feeling of having helped another human being (if the elderly woman sits down) or having the other people on the subway think positively of you in addition to several others.  Let's take a look at a more in-depth example,

How does poor Korean speaking ability lead to more expensive taxi rides?

Every so often I take a taxi from Hanti Station to my home in Bundang.  An average ride costs ₩15,000 during the daytime, but that cost fluctuates from a low of ₩13,000 to a high of ₩24,000.  How is it possible that the same taxi ride can vary ₩11,000 in cost?  The distance is the same and the taxis are required to charge the same fare.  The obvious answers are the weather and the level of traffic.  On a sunny day without traffic, the cost still varies though.  What else could be causing the varying taxi fares?

A taxi drivers' job is to take their customer to their destination using the most efficient route (fastest and therefore cheapest).  Often times, taxi drivers won't take the best route though.  Why?  Taxi drivers have a very simple and powerful incentive, money.  If the taxi drivers take a slower route, they'll earn a higher fare.  There is a disincentive to taking a slow route though, getting caught by the customer.  The taxi drivers don't want to be accused of "stealing" your money by taking a longer route.

I often find myself on the longer route in taxis and I believe the cause of it to be my Korean language ability.  My Korean stinks.  Taxi drivers can almost immediately tell I am not a native Korean and peg me as a foreigner.  This allows them to take the slow route for two reasons.  First, foreigners are typically unfamiliar with the highway system so they won't know the difference between a slow and fast route (thus reducing the chance the taxi driver will get caught).  Moreover, foreigners can't raise protest because they can't speak Korean.

All is not lost though, there is a way to get a taxi driver to take the fastest route.  When I'm in a hurry I'll offer the taxi driver ₩20,000 as the taxi fare before I get into the taxi.  The taxi driver now has incentive to take the fastest route as there is no extra money for taking the slow route AND the fastest route will use the least amount of gasoline.

What are other examples of incentives in our daily lives?  Describe a situation using incentives (and disincentives if need be).

Optional: In the comic, what is Gabe's incentive not to win the Pokémon match?

-Teacher Lee