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Topics: Capitalism, Free market, Market economy, Mixed economy, Market, Free price system / Pages: 4 (1279 words) / Published: Apr 12th, 2015
Greed and Incentives. Is there a difference?
Eric Simmons
Arkansas State University Beebe

Abstract
This paper explores greed and incentives in an economical perspective. Greed is a driving factor in a free market economy, and helps to further the process of innovation and free trade. Incentives are the driving factor behind greed. They are what motivate people to produce goods and services to other people in order to make a profit for their own self-interest. In order to help make clear the difference of greed and incentives, this paper will discuss a quote from Adam Smith’s book, Wealth of Nations, along with discussing innovation, the difference of acting in one’s self interest and being greedy, and fairness or greed in free market systems.

Greed and Incentives. Is there a difference? Greed and incentives are two terms that each play a role in the other. Incentives are sometimes rewarding and sometimes unrewarding. Greed is taught to be a bad quality to children: but is greed really bad? By taking an economical perspective of greed and incentive, one can see how each play a vital role in the free market society.
Define Greed and Incentives Greed is a strong and selfish need for something, such as, power and wealth, with the intentions to keep it for their own self. Greed can cause people to stop at nothing to obtain what they desire most, without considering the consequences that may come along with their quest to obtain the thing they want most. Incentive is what motivates and encourages someone to do something. Incentives are used to persuade people in to doing something. For example, if you have ever purchased a kids meal just to get the toy, you purchased it with the incentive of receiving. Incentives can be negative or positive. Negative incentives punish someone financially for making certain choices and behaving a certain way. Positive incentives, however, reward someone financially for making certain choices or behaving in a



References: Baumol, W. (2002). Introduction: On the Engine of Free-Market Growth. In The free-market innovation machine: Analyzing the growth miracle of capitalism (p. 1). Princeton: Princeton University Press. Buchanan, M. (2002, April 1). Wealth Happens. Retrieved February 23, 2015, from https://hbr.org/2002/04/wealth-happens Economic Incentives in Our Community. (n.d.). Retrieved February 23, 2015, from http://www.econedlink.org/lessons/index.php?lid=390&type=student Smith, A. (1776). Of the Principle which gives occasion to the Division of Labour. In An inquiry into the nature and causes of the wealth of nations (p. 21, 22). Raleigh, N.C.: Alex Catalogue.

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