Freakonomics: Incentives in a Real World
Freakonomics: Incentives in a Real World
I exchange books with some folks in the Prague Engineering Center from time
to time and I've got an interesting one from
Martin Grebac lately:
Freakonomics written by
Steven
Levitt and Stephen J. Dubner.
QUESTIONS, QUESTIONS, QUESTIONS
- What do
schoolteachers and sumo wrestlers have in common?
- Why do drug dealers
still live with their moms?
- Would you rather send your kids to play with friends, whose
parents
have a gun or to a family house with swimming pool?
- How did
the legalization of abortion affect the rate of violent crime?
If you like provocative questions, Freakonomics is a book that you must
read, although, you might come with different answers then the
author[s].
What do
schoolteachers and sumo wrestlers have in common?
This chapter is all about cheating. Or rather
Incentives
that drive specific behavior. Steven Levitt came with an idea that
incentives, in addition to general economical meaning as financial
incentives can also materialize in social or moral sphere. What
motivates [some] people to clean up after their dogs in public areas?
Definitely no financial pressure. Why people give blood for free? Can
it be boosted by offering them quite nice sum of money?
Or, speaking about bad behavior, why some teachers in US schools cheat?
It's all about incentives.
BTW the author came up with a data mining idea for detecting the
cheaters. Compare the statistical data from previous years, the same
teacher, same class and look for patterns and deviations, that's the
basics of his recipe.
WYMIWYG: What you measure is what you get
The chapter about incentives reminds me another slogan:
WYMIWYG:
What you measure is what you get. It's true in a positive as
well
as negative form. Imagine a company (can be of any kind of support,
doesn't really matter), where people are measured by the 'Time to
response'. Their motivation is to finish the call and close the case as
soon as possible, which doesn't always mean that they helped a
customer. Or not as much as the customer expects. Beside the example
with real estate agents, that's nicely mentioned there, you might come
up with other ones. Travel agent, that's motivated to sell you the
ticket that's on the table, rather than spending a couple more minutes
looking for the best price, is another example that come to my mind.
I'll write a couple more comments about the book next time, but I wonder
what your experience is with metrics-oriented organizations. Any
thoughts?
Posted at
07:48PM Oct 31, 2007
by Pavel Suk in Books |
Hi, Pavel.
I enjoyed this book too. I loaned it to a friend and his 16 year old son snatched it and read it first. His opinion of the book: "It's too short." :)
I respectfully disagree, however, that WGMIWGD. Not always, anyway. As both you and the authors have illustrated, a measure can drive undesired behavior, whether it is a good measure or not.
I have at least one success in challenging a bad measure, and winning. I believe in measures when they are understandable and meaningful and encourage attaining the desired results.
Posted by Carolyn A. Colborn on November 04, 2007 at 10:50 AM CET #
Hi Carolyn,
we're on the same boat and I completely agree with your comment. What I really dislike is the measuring just for the sake of measuring or measuring XYZ, just because it's easy to measure that.
Keeping the goal, what you want to achieve in the first place is quite important.
Posted by Pavel on November 04, 2007 at 09:48 PM CET #