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A Creative NASCAR Incentive

Our new “Freakonomics” column, appearing in today’s New York Times Magazine, takes a look at NASCAR’s recent record of crashing and fatalities. Not surprisingly, the Times’s sports section is full of NASCAR articles, since today is the running of the 2006 Daytona 500 (which marks 5 years since the death of Dale Earnhardt).

One of these articles, by Viv Bernstein, is about the amazing record compiled over the past several years by Jack Roush’s team, which last year put five drivers in the Chase for the Nextel Cup, NASCAR’s version of a post-season playoff. An interesting point of this article is the response by the rival Hendrick Motorsports team. Team owner Rick Hendrick is offering a $1,248,525 bonus to his staffers if all four of his team’s drivers make the Chase this year.

The article doesn’t stipulate who, exactly, are the staffers who get the money, but $1.2 million split among a bunch of people who make pretty good money may not be the prime incentive here; rather, as is often the case with group incentives versus individual ones, the fear of being the guy who holds back the rest of the group is probably a stronger motivation than anything.

The economist Roland Fryer tested this idea not long ago among New York City schoolchildren. He was giving out rewards to kids who did well on their tests. In some classrooms, kids competed individually; in others, they competed as a group. Fryer found that the kids in the groups did better overall.

So keep an eye this year on Rick Hendrick’s four drivers — Jeff Gordon, Jimmie Johnson, Kyle Busch, and Brian Vickers — to see if their staffs are capable of acting like a bunch of schoolkids.