<Standard E.1.3 .................................................................................................................................................................................... Standard E.1.5>

Describe how people respond predictably to positive and negative incentives.


Topics on the Page
Positive Incentives
Negative Incentives
Gamification

1905 Quaker Oats magazine advertisement
1905 Quaker Oats magazine advertisement

Focus Question: How do people respond to economic incentives?


Click here for a definition of Economic Incentives

Positive Incentives: financial rewards for making specific choices or taking certain actions. For example, buying certain items at the store, eating at certain restaurants, or choosing certain companies.

Negative Incentives: financial punishment for making specific choices or taking certain actions. For example, speeding or littering.

Businesses and government agencies offer incentives.
  • Businesses like restaurants or stores offer discounts or coupons in order to get people to choose their business.
    • In the long run,it is hoped that this will bring in a customer to the business so it can make more money.
      • People often respond to positive incentives by choosing the companies that offer them the best reward.
  • People also respond to negative incentives.
    • The government offers negative incentives in the hope that it will keep people from breaking the law.
      • For example, there is a fine for speeding and for not wearing your seat belt. There is also a fine for littering. This negative incentive keeps people from committing these acts because they do not want to pay the penalty.

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  • "Why Markets Work"Video from learner.org detailing the key concepts of the market, including incentives.

  • Video about how motivation may be in fact driven by purpose and not monetary incentives. Discusses how positive and negative incentives represent rewards or punishment.


primary_sources.PNGHarvard Business Review articleArticle that deals with instances in which incentives backfire


The source mentioned at the bottom, econedlink.org, is an excellent resource with clear examples and explanations. It has a useful worksheet about economic incentives, and other ideas for a constructive classroom lesson as well.

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  • Here is a page from econedlink.org with a discussion of incentives, both positive and negative, in the style of a lesson for the earlier grades. It could be modified slightly to work with older grades as well.
    • Here is another page from the same site which walks students through identifying which is a positive incentive vs. a negative incentive. The examples could be slightly modified depending on grade level.

Economic Incentives in Our Community is another lesson plan to help illustrate the concept.

Lesson plan outline from econedlink.org that allows students to think about examples when their decisions were swayed based off of an incentive.

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Gamification


Gamification is the application of game playing to product marketing and sales and to education and classroom learning.

Keeping Up with Gamification, Association of College & Research Libraries

Multimedia.pngWhat is Gamification? YouTube








Sources
Economic Incentives in our Community. Accessed May 5, 2008. http://www.econedlink.org/lessons/index.cfm?lesson=EM390