Our first two books were animated by a relatively simple set of ideas: Incentives are the cornerstone of modern life.
If there is one mantra a Freak lives by, it is this: people respond to incentives
People do “bad things” when there is an incentive to do so (e.g., “The Cobra Effect” — The “Cobra” reward in India)
Steven D. Levitt and Stephen J. Dubner: Think Like a Freak: The Authors of Freakonomics Offer to Retrain Your Brain
Answer these questions:
Why does Roger Goodell still have a job?
Why did so many people sell sub-prime mortgages? And funds built on sub-prime mortgages?
Why does a big company hide what is clearly wrongdoing? (Think big tobacco; BP; W. R. Grace).
It was wrong for Roger Goodell to be so negligent, so inconsistent, in his leadership regarding the domestic violence issue in the NFL — wasn’t it? Maybe what he did was worse than negligence.
It was wrong for big tobacco to tell people that its product was not addicting, Very wrong.
It was wrong for companies like W. R. Grace and BP to be so negligent, almost willfully harmful, and not face up to its problems and fix them – to the harm of very many people.
Why are so people so willfully blind, so negligent, and/or even flat out immoral, and at times unlawful?
Incentives. People like the reward, the money, and/or the “position” of “power.” There are strong incentives to not fix the wrong. Very strong.
Think back to the famous “I’d like my life back” line from Tony Hayward, CEO of BP, in the midst of the Gulf oil spill. Here’s what he said:
“There’s no one who wants this thing over more than I do, I’d like my life back.”
He meant it, of course. He had a wonderful life. And, then, he didn’t. He had gone from “respected BP CEO” to “constantly attacked BP CEO.” Who wants that job?
As long as the incentive to do bad things; or, at least, as long as the incentive to not deal with/fix the bad things, is so great, (incentive = profits to be made; money to be made; position on the “where do you fit in the hierarchy” ladder is so high), people will keep being negligent, willfully blind.
And, we all embrace and enable this system. Does the NFL have some kind of a domestic violence problem? We say we care, but do we really? The ratings don’t yet reveal that it is hurting the NFL any… The incentive to keep making money, to keep seeing the value of each franchise go up in value, seems to make owners turn many a blind eye. And, we all support it. We keep watching, keep supporting… We like our football, and “our” football teams, too much to make any changes.
Here’s a clue. Is there anyone who believes that the NFL and the Baltimore Ravens handled the Ray Rice issue in the best possible way? If they really believed that the Ravens organization should be “punished,” people would have lined up to burn their Ray Rice Ravens jerseys, rather than trade them in for another player’s jersey. Ray Rice has been punished; the Ravens; the NFL – not so much. Not yet.
And so we “complain” about Roger Goodell. But, he still has his job. The owners (his bosses) like what he has brought them. The incentives are too strong to keep him in his “leadership“ position, Because, that position is not about moral leadership, but about “financial” leadership.
Incentives are the cornerstone of modern life. Incentives rule the world. Yes, they do.