Freakonomics Lesson Plan

There are three different kinds of incentives: economic, social, and moral. What are the differences between them? Can you think of examples of each one? In the book, the authors use the example of the anti-smoking campaign to show how all three incentives can exist within a single incentive scheme. Can you think of another example that shows this?

Economic incentives involve money—people have an incentive to go to work every day because they need money to buy food and other necessities. Social incentives consider the thoughts and opinions of other people towards us. For example, we might start smoking if all our friends are doing it (peer pressure) despite the incentives...