Wrong Kind Of Incentives

Pick any economics textbook and they will tell you about how people are motivated by incentives. These are what guide the economy and ensure it functions. As Adam Smith famously said, we get food from butchers and bakers not through charity but because they have an incentive to sell and make a profit. But what happens when incentives lead people in a negative direction? What if people have an incentive not to help others but make a profit from them? One common problem known to health economists is known as supplier induced demand and occurs when doctors put making money ahead of helping their patients. Continue reading “Wrong Kind Of Incentives”

Advertisements