I feel like there's an important distinction missing here between artificially manufactured incentives and the sort of intrinsic incentives baked into various features of the universe. "Obeying" someone else's reward system that they created to get you to act a certain way is one thing, while living in accordance with what makes your body feel good and healthy is quite different
I'd love to hear your thoughts on different kinds of incentives and the ways to work around them.
One distinction I wonder about is:
- "Hard" incentives: do good at a finance degree and you will very likely make concrete large sums of money which you can exchange for many other things.
- "Soft" incentives: become a good teacher and you will sometimes, unpredictably, and in ways largely non-transmutable to anything else, receive gratitude and enjoyment from having changed people's lives.
And I notice that while hard incentives for concrete money and power are a constant through history, the balance of that against soft incentives, and the particular soft incentives that are seen as most culturally desirable, change over time.
When we say "incentives are wrong" we often mean the former, and then have to decide whether to change the hard or the soft bit to fix things.
- Is politics bad because candidates can make way more money helping the bad guys, and the solution is to raise more money for the good guys? Or is the problem that society needs stronger journalism and a sense of imposed shame so people are more hesitant to publicly get paid to do bad things anymore.
- Would the best society be one in which teachers are paid better than bankers? Or one in which teachers are paid better than today, still less than bankers, but more reliably not yelled at by parents and administrators and held in higher social esteem? (In other words, where the punishment of hard incentives is less, but you still must desire the soft incentive to be willing to do it.)
Also: per your previous post on people getting more boring, is the wealth of our society making incentives harder to not follow? e.g. the difference between being at the 5th percentile and the 50th percentile of wealth is much larger now than it was 100 years ago, does this mean a lot more people are competing for the same set of hard incentives, driving up the personal cost of failing to follow the structural incentives?
And can we distinguish "climbing the ladder" of incentives (blindly following the incentive gradient with no other purpose) versus "avoiding being pushed down the ladder" (trying to maintain a socio-economic status while also maximizing for some other goal)?
Was also thinking about this - "positive" incentives (I get X) vs "negative" incentives (maybe more accurately called 'punishments'), and also the incentives of basic necessities (health insurance, housing, education) vs incentives like social or professional prestige, lots of money, etc. I still believe there are people who forsake basic necessities to do the right thing, but it's definitely much harder.
I want to talk about two related items in this post: (1) things-that-are-like-talking vs. things-that-are-like-reading; and (2) "we don’t fix our mental models until something tells us that they’re broken". Both of these feel to me very close to Daniel Kahneman's idea of System One vs. System Two thinking. System One is easy and natural and we love to do it, because it's easy, and also we're very good at it; but it relies on gut feelings and gets important things wrong a lot of the time; System Two is hard and difficult and we hate to do it and we're bad at it; we resist doing it until we're forced to.
Talking is easy and natural and System One. The moral/religious model of most people is System One. Relying on incentives to decide how to live your life is System One. All of it is, as you say, "for losers." (OK, talking in and of itself isn't for losers, but if you don't learn how to read....)
Anyway. I think all of this is basically correct and psychologically well-grounded.
If you don't want to be a loser, the next question is how to make yourself *see* that System One is failing you on a specific point. How to get past the easy answers provided by System One and make yourself buckle down and do some hard but necessary System Two thinking -- and, perhaps more importantly, how to know which aspects of your life require this buckling down (and which aspects you can coast for now). This piece mentions something about "seeing the fish" and I appreciate the metaphor and I sort of see what you're getting at (though some more examples would help). But my most important objection is that I don't know how one would operationalize it. "Seeing the fish" seems like something that just happens to you, rather than something you can intentionally do or learn to do better.
Put otherwise: backbone is a virtue, yes, but it's hardly the only virtue that matters. How do we cultivate the better kinds of intellectual habits; how do we get our children to do the same; etc. (Even posing these questions I suddenly feel a little bit like Aristotle.)
Your article has prompted me to explore writing a few essay length posts on Substack. I think the topic of incentives is more nuanced, depending on the scale of analysis, and definition.
From the first living cells to modern civilizations, incentives shape behavior by directing the flow of energy, information, and opportunity.
Biologically, incentives such as nutrients, reproduction, and survival drive adaptation, but can also promote competition, disease, and overconsumption.
Psychologically, curiosity, pleasure, meaning, and social approval motivate learning and creativity, yet they also fuel addiction, anxiety, and status-seeking.
Sociological incentives encourage trust, cooperation, and shared identity, while simultaneously enabling conformity, tribalism, and exclusion.
Economic incentives reward innovation, specialization, and productivity, but can amplify inequality, short-term thinking, and exploitation.
Political incentives coordinate collective action and protect public goods, yet they may also encourage polarization, bureaucratic self-preservation, and the pursuit of power over the common good.
Alex Wissner-Gross argues that intelligent systems tend to maximize future freedom of action—the diversity of options available.
Karl Friston’s Free Energy Principle suggests that living systems persist by minimizing uncertainty while remaining adaptive.
Together, these perspectives reveal a fundamental tension: flourishing depends on balancing exploration with stability, expanding possibilities without sacrificing coherence.
Across every scale of life, healthy incentives increase both resilience and the capacity to create richer futures
Great piece. My own version of this was getting inflamed during my econ PhD at my peers who would say things like "it's only rational for me to abuse the photocopier, it's free". When I would say "rational in an economic sense maybe, but it's immoral", and then they would act like they hadn't done 200 hours of game theory and ask "what is the relationship between rationality and morality?".
Incentives are an interesting paradox. They do work but often produce the wrong result. So, as a person motivated to manage the world around you in a way that seems advantageous, be careful, there are consequences.
The world is not a neat and orderly place. It is battered by natural forces, economic uncertainty, and the vagaries caused by political disquiet. Time is spent controlling the influences that determine relationships, decision-making, and access to resources. Workers, like businesses and their investors, would prefer an environment where risks and unknowns are kept to a minimum.
Adversity has always existed, to some extent, been the factor responsible for many organizational and administrative failures. This has encouraged process owners to try and understand, then manage capricious influences. Problem solving and process improvement have become accepted methods for changing conditions that interfere with constancy.
Unfortunately, however, humankind comes preloaded with a mindset, embedded in its DNA, which is selfish and based on a trial-and-error ancestral existence. So, finding and reaching an agreement can be extremely difficult. Often a negotiated compromise that leaves some people feeling cheated and mistreated.
Solution finding is about human nature and should also recognize that emotions carry valuable information. Being human at work means embracing authenticity, empathy, and emotional intelligence to foster resilience and thoughtful connections so all can thrive professionally. Being technical and overtly managerial can be useful, but work should also create happiness and have meaning. The following are practices that will improve workplace conditions and promote emotional intelligence.
Foster Psychological Safety: The purpose of management practice is to help the organization stay current, relevant, and productive so all stakeholders -- workers, investors, and the community at large – benefit. There needs to be safety in the workplace, where team members feel secure participating, expressing ideas, and can ask questions without judgment. Open dialogue and respectful disagreement improve interactions to build trust.
Practice Empathy: Being empathetic means feeling the emotional temperature behind another person’s words and then respond in a way that shows a genuine appreciation for prevailing circumstances. Empathy is the ability to recognize, understand, and appropriately respond to someone else’s emotions. Start by asking questions to gain understanding about important points and feelings. Listen actively by orientating focus toward the other person. Signal concern by responding sympathetically without judgement or being overly prescriptive.
Be Authentic: At its core, authenticity is about being trustworthy. Personal actions and behaviors align with expressed values. There is a constancy of action. Manners are repeatable and predictable. Outward behavior shows an understanding of how personal actions affect workplace culture. Tasks and decisions are clarified to prevent misunderstanding. Individual ideas and contributions are accepted and acknowledged. Group collaboration on workplace issues is encouraged, responsibility is delegated, and praise given generously.
- I read the link to the paper on Moralistic Therapeutic Deism, and the authors and you feel it’s somehow bad? Although the paper considers it a base layer that only sometimes interacts with a civic layer, I’d argue it’s what allows the United States to be so capacious in its respect towards all faiths.
- On the other hand, I see your point about it allowing people to ignore problems that still exist. Now, I think it’s good if individuals think harder about their commitments and look for Fish, but what about showing others that Fish? Is there a moral obligation to do so? We probably agree that Sumner was a great hero for doing so, even if it took 100 years to achieve all he demanded. What of land acknowledgments? Yesterday I went to the Gene Siskel Film Center, and before the movie started the screen presented a five paragraph land acknowledgement that took approximately two minutes to unfurl. It struck me that this was holding an audience hostage, rather than putting it on a plaque as the Harold Washington Library does. It also feels like the opposite of the MTD: “You must feel bad about this, all the time”, so does that mean it’s better? Is any moral language better than godslop? I argue this particular version is worse.
Frankly, I don’t even think this post connects MTD with blind acceptance of “incentives”. If anything, skepticism (“Why these incentives? Are they actually good?”) would seem *negatively* correlated to the doctrinal approach preferred by the authors of that paper.
This doesn't compute for me. You're treating incentives as if they're toys in a Cracker Jacks box. I'm thinking about incentives like "I can pay my mortgage and car payments this month" or "I can avoid a a tax audit that'll probably end up shutting down my company" type incentives since those are the kind that real people have to negotiate in their lives.
Yes yes I absolutely and massively agree --- IN the sphere of Very Important Things. However in every day bits and pieces I don't want to have to stop and think to reinvent the wheel for every little system. I kind of want other parts of the distributed specialized machine of Civilisation to have worked out things for me, things like traffic flows and crowd safety at stadiums. I want to be able to drift out half unaware and for the markings on the floor to direct me in a safe and convenient way. It would be good if I didn't have to go out of my way to do that. Seems like a similar concept
This seems no ignore the existence of competing incentives and how the equilibrium between competing incentives shift. Additionally that intrinsic and extrinsic incentives exist. Enough studies in human nature show that both status and belonging are powerful incentives , and that within different cultures and in groups status can be achieved in different ways. If you want everyone to respond similarly to a extrinsic incentive you have to have established a fairly universal culture. We embrace multiculturalism we shouldn’t be surprised when people don’t respond the same way to incentives .
Wisconsin winter, walking out from Mass—one of the step-sleepers asked me “man it’s so cold, you got a blanket?”
Likely patting my coat, as I would had he asked for change—“nah I’m sorry I don’t.”
With the impatience of someone bone-cold and dealing with the umpteenth moron of the day, he said something to the effect of “no shit, Sherlock—would you go buy me one from that very visible and open Walgreens?”
I wandered the aisles in a fish-gazing haze, checked out, mumbled an apology as I handed him the bag and numbly hurried back to the parking garage and home. The memory embarrasses me still.
Incentives are for people who lack courage – this rings so true. As someone who created a company to, well, "mathematically prove that there is a monetary incentive for corporates to do good in the world," I'm starting to wonder whether I should rather go prove the goodness itself (somehow)...
N.B.: My "fish" were homeless people, too, on the streets of Paris. Less poetic because I was researching particle physics and not sociology, but it rhymes either way.
You might enjoy some of that chat in here about how game designers can deploy explicit incentives and scoring systems as scaffolding to enable meaning/purpose to emerge.
Start climbing for points; keep climbing for the intrinsic joy of the body in motion!
Also: why closed scoring systems can be so good in games and so stifling in real life.
I feel like there's an important distinction missing here between artificially manufactured incentives and the sort of intrinsic incentives baked into various features of the universe. "Obeying" someone else's reward system that they created to get you to act a certain way is one thing, while living in accordance with what makes your body feel good and healthy is quite different
I'd love to hear your thoughts on different kinds of incentives and the ways to work around them.
One distinction I wonder about is:
- "Hard" incentives: do good at a finance degree and you will very likely make concrete large sums of money which you can exchange for many other things.
- "Soft" incentives: become a good teacher and you will sometimes, unpredictably, and in ways largely non-transmutable to anything else, receive gratitude and enjoyment from having changed people's lives.
And I notice that while hard incentives for concrete money and power are a constant through history, the balance of that against soft incentives, and the particular soft incentives that are seen as most culturally desirable, change over time.
When we say "incentives are wrong" we often mean the former, and then have to decide whether to change the hard or the soft bit to fix things.
- Is politics bad because candidates can make way more money helping the bad guys, and the solution is to raise more money for the good guys? Or is the problem that society needs stronger journalism and a sense of imposed shame so people are more hesitant to publicly get paid to do bad things anymore.
- Would the best society be one in which teachers are paid better than bankers? Or one in which teachers are paid better than today, still less than bankers, but more reliably not yelled at by parents and administrators and held in higher social esteem? (In other words, where the punishment of hard incentives is less, but you still must desire the soft incentive to be willing to do it.)
Also -- is pay an incentive for people who don't care about incentives that much (since some people do become school teachers)?
Also: per your previous post on people getting more boring, is the wealth of our society making incentives harder to not follow? e.g. the difference between being at the 5th percentile and the 50th percentile of wealth is much larger now than it was 100 years ago, does this mean a lot more people are competing for the same set of hard incentives, driving up the personal cost of failing to follow the structural incentives?
And can we distinguish "climbing the ladder" of incentives (blindly following the incentive gradient with no other purpose) versus "avoiding being pushed down the ladder" (trying to maintain a socio-economic status while also maximizing for some other goal)?
Was also thinking about this - "positive" incentives (I get X) vs "negative" incentives (maybe more accurately called 'punishments'), and also the incentives of basic necessities (health insurance, housing, education) vs incentives like social or professional prestige, lots of money, etc. I still believe there are people who forsake basic necessities to do the right thing, but it's definitely much harder.
now that is what the fuck i am talking about adam, that’s what’s up. yes! YES!
Hi Adam, first of all thanks for a helpful post.
I want to talk about two related items in this post: (1) things-that-are-like-talking vs. things-that-are-like-reading; and (2) "we don’t fix our mental models until something tells us that they’re broken". Both of these feel to me very close to Daniel Kahneman's idea of System One vs. System Two thinking. System One is easy and natural and we love to do it, because it's easy, and also we're very good at it; but it relies on gut feelings and gets important things wrong a lot of the time; System Two is hard and difficult and we hate to do it and we're bad at it; we resist doing it until we're forced to.
Talking is easy and natural and System One. The moral/religious model of most people is System One. Relying on incentives to decide how to live your life is System One. All of it is, as you say, "for losers." (OK, talking in and of itself isn't for losers, but if you don't learn how to read....)
Anyway. I think all of this is basically correct and psychologically well-grounded.
If you don't want to be a loser, the next question is how to make yourself *see* that System One is failing you on a specific point. How to get past the easy answers provided by System One and make yourself buckle down and do some hard but necessary System Two thinking -- and, perhaps more importantly, how to know which aspects of your life require this buckling down (and which aspects you can coast for now). This piece mentions something about "seeing the fish" and I appreciate the metaphor and I sort of see what you're getting at (though some more examples would help). But my most important objection is that I don't know how one would operationalize it. "Seeing the fish" seems like something that just happens to you, rather than something you can intentionally do or learn to do better.
Put otherwise: backbone is a virtue, yes, but it's hardly the only virtue that matters. How do we cultivate the better kinds of intellectual habits; how do we get our children to do the same; etc. (Even posing these questions I suddenly feel a little bit like Aristotle.)
Thanks again for writing this. Good stuff.
Your article has prompted me to explore writing a few essay length posts on Substack. I think the topic of incentives is more nuanced, depending on the scale of analysis, and definition.
From the first living cells to modern civilizations, incentives shape behavior by directing the flow of energy, information, and opportunity.
Biologically, incentives such as nutrients, reproduction, and survival drive adaptation, but can also promote competition, disease, and overconsumption.
Psychologically, curiosity, pleasure, meaning, and social approval motivate learning and creativity, yet they also fuel addiction, anxiety, and status-seeking.
Sociological incentives encourage trust, cooperation, and shared identity, while simultaneously enabling conformity, tribalism, and exclusion.
Economic incentives reward innovation, specialization, and productivity, but can amplify inequality, short-term thinking, and exploitation.
Political incentives coordinate collective action and protect public goods, yet they may also encourage polarization, bureaucratic self-preservation, and the pursuit of power over the common good.
Alex Wissner-Gross argues that intelligent systems tend to maximize future freedom of action—the diversity of options available.
Karl Friston’s Free Energy Principle suggests that living systems persist by minimizing uncertainty while remaining adaptive.
Together, these perspectives reveal a fundamental tension: flourishing depends on balancing exploration with stability, expanding possibilities without sacrificing coherence.
Across every scale of life, healthy incentives increase both resilience and the capacity to create richer futures
Great piece. My own version of this was getting inflamed during my econ PhD at my peers who would say things like "it's only rational for me to abuse the photocopier, it's free". When I would say "rational in an economic sense maybe, but it's immoral", and then they would act like they hadn't done 200 hours of game theory and ask "what is the relationship between rationality and morality?".
I think wellbeing and integrity are intimately intwined. This is a major theme of my book, Beyond Happy. https://www.amazon.co.uk/Beyond-Happy-Rethink-Happiness-Fulfilment/dp/B0DVMQLGF4/ref=sr_1_1?sr=8-1
Incentives are an interesting paradox. They do work but often produce the wrong result. So, as a person motivated to manage the world around you in a way that seems advantageous, be careful, there are consequences.
The world is not a neat and orderly place. It is battered by natural forces, economic uncertainty, and the vagaries caused by political disquiet. Time is spent controlling the influences that determine relationships, decision-making, and access to resources. Workers, like businesses and their investors, would prefer an environment where risks and unknowns are kept to a minimum.
Adversity has always existed, to some extent, been the factor responsible for many organizational and administrative failures. This has encouraged process owners to try and understand, then manage capricious influences. Problem solving and process improvement have become accepted methods for changing conditions that interfere with constancy.
Unfortunately, however, humankind comes preloaded with a mindset, embedded in its DNA, which is selfish and based on a trial-and-error ancestral existence. So, finding and reaching an agreement can be extremely difficult. Often a negotiated compromise that leaves some people feeling cheated and mistreated.
Solution finding is about human nature and should also recognize that emotions carry valuable information. Being human at work means embracing authenticity, empathy, and emotional intelligence to foster resilience and thoughtful connections so all can thrive professionally. Being technical and overtly managerial can be useful, but work should also create happiness and have meaning. The following are practices that will improve workplace conditions and promote emotional intelligence.
Foster Psychological Safety: The purpose of management practice is to help the organization stay current, relevant, and productive so all stakeholders -- workers, investors, and the community at large – benefit. There needs to be safety in the workplace, where team members feel secure participating, expressing ideas, and can ask questions without judgment. Open dialogue and respectful disagreement improve interactions to build trust.
Practice Empathy: Being empathetic means feeling the emotional temperature behind another person’s words and then respond in a way that shows a genuine appreciation for prevailing circumstances. Empathy is the ability to recognize, understand, and appropriately respond to someone else’s emotions. Start by asking questions to gain understanding about important points and feelings. Listen actively by orientating focus toward the other person. Signal concern by responding sympathetically without judgement or being overly prescriptive.
Be Authentic: At its core, authenticity is about being trustworthy. Personal actions and behaviors align with expressed values. There is a constancy of action. Manners are repeatable and predictable. Outward behavior shows an understanding of how personal actions affect workplace culture. Tasks and decisions are clarified to prevent misunderstanding. Individual ideas and contributions are accepted and acknowledged. Group collaboration on workplace issues is encouraged, responsibility is delegated, and praise given generously.
Two things:
- I read the link to the paper on Moralistic Therapeutic Deism, and the authors and you feel it’s somehow bad? Although the paper considers it a base layer that only sometimes interacts with a civic layer, I’d argue it’s what allows the United States to be so capacious in its respect towards all faiths.
- On the other hand, I see your point about it allowing people to ignore problems that still exist. Now, I think it’s good if individuals think harder about their commitments and look for Fish, but what about showing others that Fish? Is there a moral obligation to do so? We probably agree that Sumner was a great hero for doing so, even if it took 100 years to achieve all he demanded. What of land acknowledgments? Yesterday I went to the Gene Siskel Film Center, and before the movie started the screen presented a five paragraph land acknowledgement that took approximately two minutes to unfurl. It struck me that this was holding an audience hostage, rather than putting it on a plaque as the Harold Washington Library does. It also feels like the opposite of the MTD: “You must feel bad about this, all the time”, so does that mean it’s better? Is any moral language better than godslop? I argue this particular version is worse.
Frankly, I don’t even think this post connects MTD with blind acceptance of “incentives”. If anything, skepticism (“Why these incentives? Are they actually good?”) would seem *negatively* correlated to the doctrinal approach preferred by the authors of that paper.
This doesn't compute for me. You're treating incentives as if they're toys in a Cracker Jacks box. I'm thinking about incentives like "I can pay my mortgage and car payments this month" or "I can avoid a a tax audit that'll probably end up shutting down my company" type incentives since those are the kind that real people have to negotiate in their lives.
Yes yes I absolutely and massively agree --- IN the sphere of Very Important Things. However in every day bits and pieces I don't want to have to stop and think to reinvent the wheel for every little system. I kind of want other parts of the distributed specialized machine of Civilisation to have worked out things for me, things like traffic flows and crowd safety at stadiums. I want to be able to drift out half unaware and for the markings on the floor to direct me in a safe and convenient way. It would be good if I didn't have to go out of my way to do that. Seems like a similar concept
This seems no ignore the existence of competing incentives and how the equilibrium between competing incentives shift. Additionally that intrinsic and extrinsic incentives exist. Enough studies in human nature show that both status and belonging are powerful incentives , and that within different cultures and in groups status can be achieved in different ways. If you want everyone to respond similarly to a extrinsic incentive you have to have established a fairly universal culture. We embrace multiculturalism we shouldn’t be surprised when people don’t respond the same way to incentives .
Wisconsin winter, walking out from Mass—one of the step-sleepers asked me “man it’s so cold, you got a blanket?”
Likely patting my coat, as I would had he asked for change—“nah I’m sorry I don’t.”
With the impatience of someone bone-cold and dealing with the umpteenth moron of the day, he said something to the effect of “no shit, Sherlock—would you go buy me one from that very visible and open Walgreens?”
I wandered the aisles in a fish-gazing haze, checked out, mumbled an apology as I handed him the bag and numbly hurried back to the parking garage and home. The memory embarrasses me still.
Incentives are for people who lack courage – this rings so true. As someone who created a company to, well, "mathematically prove that there is a monetary incentive for corporates to do good in the world," I'm starting to wonder whether I should rather go prove the goodness itself (somehow)...
N.B.: My "fish" were homeless people, too, on the streets of Paris. Less poetic because I was researching particle physics and not sociology, but it rhymes either way.
You might enjoy some of that chat in here about how game designers can deploy explicit incentives and scoring systems as scaffolding to enable meaning/purpose to emerge.
Start climbing for points; keep climbing for the intrinsic joy of the body in motion!
Also: why closed scoring systems can be so good in games and so stifling in real life.
https://youtu.be/jHrskVhWdsU?is=gMeQ8_IjwfszTC6M
Clearly we should come up with some kind of incentive for people to do the right thing despite incentives :p
You did not see the fish.
When you do, good luck.