Monday, January 19, 2015

Incentives, a modern frame

Strings Attached: Untangling the Ethics of Incentives

I've found extremely appealing the chapter 2 of the book "Strings Attached", it helps to understand the etimology of incentives as a word in the english language and its meaning:
For more than 250 years, starting in about 1600, the word “incentive” meant “inciting or arousing to feeling or action, provocative, exciting.” Uses cited by the authoritative Oxford English Dictionary include: “The Lord Shaftesbury . . . made an incentive speech in the House of Lords (1734),” or “This Paper is principally designed as an incentive to the Love of our Country (1713).” The last example cited of the term in this sense is dated 1866 and, like the others, it comes from an English source. Then there is a striking change. “Mr. Charles E. Wilson . . . is urging war industries to adopt ‘incentive pay’—that is, to pay workers more if they produce more.” This is the first example from the same dictionary of the use of the term in its contemporary sense, and it is an American example dated three quarters of a century later in 1943.
There is a huge gap in time, place, and meaning between the two sorts of citations, a gap that introduces several puzzles. What was happening in America when the new meaning of incentives was introduced? Why is this conception missing from the vocabulary in the seventeenth and eighteenth centuries, the very years in which the idea of a market economy was being discovered and articulated? We are accustomed to believe that our thinking about political economy rests on the work of the likes of John Locke, Bernard Mandeville, Adam Smith, David Hume, Jeremy Bentham, James Mill, John Stuart Mill, and the authors of The Federalist Papers. But with very few exceptions, “incentive” does not appear in any of their writings.
Beyond chapter 2, the whole book deserves to be read.

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