Freakonomics Chapter1

“Incentives are the cornerstone of modern life”(Levitt and Dubner 12). Levitt and Dubner once mentioned in their book “Freakonomics”. According to Oxford dictionary, incentives are something tends to incite to action or greater effort, as a reward offered for increased productivity (“incentives”). In business field, incentives are something given by bosses to encourage their employees to endeavour in bringing benefits to their business. For a simple example, the employee who hits the monthly or year sales target will get cash or prizes as incentives. Apparently, these incentives are something that motivates employees maintains their great performance and also to motivate other employee, whoever wants to get the incentives, work harder. These incentives created competitive between employees which can definitely help in company’s growth. In Freakonomics, Levitt and Dubner once said “Economics is the root of the study of incentives: how people get what they want or need, especially when other people want or need the same thing” (Levitt and Dubner 16). Nevertheless, incentives stand an important position in the study of economics. However, incentives that commonly involving in our life can be categorized into social, moral and economic incentives. “An incentive is always a tiny object with astonishing power to change a situation” (Levitt and Dubner 17). There are lots of examples whereby moral or social incentives and economic incentives are both present in Freakonomics. One of the examples which is being shown in recent years is about the anti-smoking campaign. “The additional of a $3-per-pack ‘sin tax’ is a strong economic incentive against buying cigarettes” (Levitt and Dubner 19). In term of the additional tax, it helps the growth of economy in U.S. since there are more than 1 million people in the country are smoking. “The banning of cigarettes in restaurants and bars is a powerful social incentive”(Levitt and Dubner 19). It is because smoking is a type of

Cited: BSIRN. “Global Tax and Business Portal” Tax incentive in Malaysia.org. n.p. n.d. Web. 5 May. 2011. “Incentives” Oxford Dictionary, London: Oxford University Press. Print. Levitt, Steven D., and Stephen J. Dubner. . "What Do School Teachers and Sumo Wrestlers Have in Common?" Freakonomics: a Rogue Economist Explores the Hidden Side of Everything.. England: Penguin Books Ltd, 2006. Print.