Archives for incentives



How to Make People Quit Smoking: A New Freakonomics Radio Podcast

Our latest Freakonomics Radio episode is called “How to Make People Quit Smoking.” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.) The gist: the war on cigarettes has been fairly successful in some places. But 1 billion humans still smoke — so what comes next?

In the U.S., roughly 70 percent of smokers say they want to quit. But when they try, some 90 percent of them fail. So what does get people to smoke less? Something must be working: the smoking rate in the U.S. has fallen by more than half.

Kenneth Warner, an economist at the University of Michigan School of Public Health, has been doing tobacco-policy research since the 1970’s. One of the most powerful smoking deterrents, he says, is making cigarettes more expensive. Read More »



Reducing Recidivism Through Incentives

Ryan Bradley, writing for CNNMoney, highlights an interesting policy experiment currently underway in New York City: a social impact bond geared at reducing recidivism:

They are called “social impact bonds.” The first, issued in 2012 by Goldman Sachs (GS), is underway in New York City for $9.6 million. The money is going toward a four-year program to reduce reincarceration of juveniles at Riker’s Island prison. Goldman Sachs has a vested interest in the success of this program. If participants stop returning to jail at a rate of 10% or greater, Goldman will earn $2.1 million. If the recidivism rate rises above 10% over four years, Goldman stands to lose $2.4 million. In a recent report, the Brennan Center for Justice at NYU School of Law calls this a “bet on success … instead of using the typical model of privatization, in which private prisons generally bet on failure (i.e. the more prisoners, the better).”

Bryan Stevenson, the founder and executive director of a nonprofit that, among other things, helps former convicts avoid reincarceration for minor parole violations, believes the idea could be “transformative.”   Read More »



How to Sell Ice Cream in Cold Weather

From Eric Kirkland, a photo of an ice-cream shop in Colorado Springs with a weather-sensitive customer-loyalty plan: Read More »



What Makes People Do What They Do?

John List and Uri Gneezy have appeared on our blog many times. This guest post is part a series adapted from their new book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. List appeared in our recent podcast How to Raise Money Without Killing a Kitten.”

Money is important. For a long time, economists thought that it was the only thing that mattered. And, in fact, if you want people to do what you want, money can be incredibly useful. Out to entice the best workers? Pay more. Want to sell a product? Discount it, a lot. Want to discourage a bad behavior? Impose a monetary fine.

It seemed a little silly to us though (as well as to other behavioral economists doing work back in the 1990s) to think that money was the only thing that mattered. So we set out to learn exactly when and how monetary incentives work. Along the way, we discovered some environments where incentives don’t work at all.  Read More »



What Can the Olympics Teach Us About Closing the Achievement Gap?

John List and Uri Gneezy have appeared on our blog many times. This guest post is part of a series adapted from their book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. List also appeared in our recent podcast “How to Raise Money Without Killing a Kitten.”

If you look at two pictures of two athletes: One is beaming, the other doesn’t seem too sure what she’s feeling. Which do you think won the silver? Which the bronze? Easy, right? Silver is better than bronze, so the smiling girl on the right must have won the silver. Which do you think won the silver? Which the bronze? Easy, right? Silver is better than bronze, so the smiling girl on the right must have won the silver. Read More »



Choosing Your Reward

Last spring, I blogged about the $5/day for in-house food purchases that many Sheraton hotels give guests who waive house-cleaning.  In some hotels, they offer a choice between the $5 and 500 frequent-guest points.  Which is better?  For infrequent guests like me, the $5 is better.  But in some of the best Sheraton hotels, it only takes 10,000 points to obtain a free night—i.e., 20 days of no house-cleaning.  If you are a frequent guest, that seems like a much better deal—the opportunity cost of one free night is $100, typically far below the price of a night.  The Sheraton’s offer creates a separation between infrequent and frequent guests, benefiting the latter (and giving people an incentive to become frequent guests). (HT: DJH)



Freakonomics Experiments Lottery Winners

If you have a tough decision to make, wander on over to FreakonomicsExperiments.com. So far we’ve helped more than 20,000 people make decisions, and the preliminary results look great.

As an incentive to get people who tossed coins at FreakonomicsExperiments to complete follow-up surveys, we promised to give away prizes via lottery. As evidence we kept our word, the complete list of winners is here. Read More »



How Much Tax Are Athletes Willing to Pay?

The Laffer Curve is a unicorn-y concept that seeks to explain the rate of taxation at which revenues will fall because earners either move away or decide to earn less (or cheat more, I guess).

If I were a tax scholar interested in this concept, I would be taking a good, hard look at the current behavior of top-tier professional athletes. Boxing is particularly interesting because it allows a participant to choose where he performs. If you are a pro golfer or tennis player, you might be inclined to skip a particular event because of a tax situation, but you generally need to play where the event is happening. A top-ranked boxer, meanwhile, can fight where he gets the best deal.

Which is why it’s interesting to read that Manny Pacquiao will probably never fight in New York — primarily, says promoter Bob Arum, because of the taxes he’d have to pay. Read More »