Part of a series on |
Economics |
---|
The phrase "perverse incentive" is often used in economics to describe an incentive structure with undesirable results, particularly when those effects are unexpected and contrary to the intentions of its designers. [1]
The results of a perverse incentive scheme are also sometimes called cobra effects. This name was coined by economist Horst Siebert based on an anecdote taken from the British Raj. [2] [3] The British government, concerned about the number of venomous cobras in Delhi, offered a bounty for every dead cobra. Initially, this was a successful strategy; large numbers of snakes were killed for the reward. Eventually, however, people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped. The cobra breeders set their snakes free, leading to an overall increase in the wild cobra population. [4] [5]
In his autobiography, Mark Twain says that his wife, Olivia Langdon Clemens, had a similar experience: [44]
Once in Hartford the flies were so numerous for a time, and so troublesome, that Mrs. Clemens conceived the idea of paying George a bounty on all the flies he might kill. The children saw an opportunity here for the acquisition of sudden wealth. ... Any Government could have told her that the best way to increase wolves in America, rabbits in Australia, and snakes in India, is to pay a bounty on their scalps. Then every patriot goes to raising them.
A heat pump is a device that consumes energy to transfer heat from a cold heat sink to a hot heat sink. Specifically, the heat pump transfers thermal energy using a refrigeration cycle, cooling the cool space and warming the warm space. In cold weather, a heat pump can move heat from the cool outdoors to warm a house ; the pump may also be designed to move heat from the house to the warmer outdoors in warm weather. As they transfer heat rather than generating heat, they are more energy-efficient than other ways of heating or cooling a home.
A subsidy, subvention or government incentive is a type of government expenditure for individuals and households, as well as businesses with the aim of stabilizing the economy. It ensures that individuals and households are viable by having access to essential goods and services while giving businesses the opportunity to stay afloat and/or competitive. Subsidies not only promote long term economic stability but also help governments to respond to economic shocks during a recession or in response to unforeseen shocks, such as the COVID-19 pandemic.
In general, incentives are anything that persuade a person or organization to alter their behavior to produce the desired outcome. The laws of economists and of behavior state that higher incentives amount to greater levels of effort and therefore higher levels of performance. For comparison, a disincentive is something that discourages from certain actions.
Drug rehabilitation is the process of medical or psychotherapeutic treatment for dependency on psychoactive substances such as alcohol, prescription drugs, and street drugs such as cannabis, cocaine, heroin, and amphetamines. The general intent is to enable the patient to confront substance dependence, if present, and stop substance misuse to avoid the psychological, legal, financial, social, and medical consequences that can be caused.
The overjustification effect occurs when an expected external incentive such as money or prizes decreases a person's intrinsic motivation to perform a task. Overjustification is an explanation for the phenomenon known as motivational "crowding out". The overall effect of offering a reward for a previously unrewarded activity is a shift to extrinsic motivation and the undermining of pre-existing intrinsic motivation. Once rewards are no longer offered, interest in the activity is lost; prior intrinsic motivation does not return, and extrinsic rewards must be continuously offered as motivation to sustain the activity.
In the healthcare industry, pay for performance (P4P), also known as "value-based purchasing", is a payment model that offers financial incentives to physicians, hospitals, medical groups, and other healthcare providers for meeting certain performance measures. Clinical outcomes, such as longer survival, are difficult to measure, so pay for performance systems usually evaluate process quality and efficiency, such as measuring blood pressure, lowering blood pressure, or counseling patients to stop smoking. This model also penalizes health care providers for poor outcomes, medical errors, or increased costs. Integrated delivery systems where insurers and providers share in the cost are intended to help align incentives for value-based care.
Deinstitutionalisation is the process of replacing long-stay psychiatric hospitals with less isolated community mental health services for those diagnosed with a mental disorder or developmental disability. In the 1950's and 1960's, it led to the closure of many psychiatric hospitals, as patients were increasingly cared for at home, in halfway houses, group homes, and clinics, in regular hospitals, or not at all.
Fee-for-service (FFS) is a payment model where services are unbundled and paid for separately.
Share repurchase, also known as share buyback or stock buyback, is the reacquisition by a company of its own shares. It represents an alternate and more flexible way of returning money to shareholders. Repurchases allow stockholders to delay taxes which they would have been required to pay on dividends in the year the dividends are paid, to instead pay taxes on the capital gains they receive when they sell the stock, whose price is now proportionally higher because of the smaller number of shares outstanding.
An air source heat pump (ASHP) is a heat pump that can absorb heat from air outside a building and release it inside; it uses the same vapor-compression refrigeration process and much the same equipment as an air conditioner, but in the opposite direction. ASHPs are the most common type of heat pump and, usually being smaller, tend to be used to heat individual houses or flats rather than blocks, districts or industrial processes.
Patient dumping or homeless dumping is the practice of hospitals and emergency services inappropriately releasing homeless or indigent patients to public hospitals or on to the streets instead of transferring them to a homeless shelter or retaining them. These cases may usually require expensive medical care with minimal government reimbursement from Medicaid or Medicare. The term homeless dumping has been used since the late 19th century and resurfaced throughout the 20th century alongside legislation and policy changes aimed at addressing the issue. Studies of the issue have indicated mixed results from the United States' policy interventions and have proposed a variety of ideas to remedy the problem.
A gun buyback program is one instituted to purchase privately owned firearms. The goal of such programs is to reduce the circulation of both legally and illegally owned firearms. A buyback program would provide a process whereby civilians can dispose of illicitly owned firearms without financial loss or risk of prosecution. In most cases, the agents purchasing the guns are local police.
An incentive program is a formal scheme used to promote or encourage specific actions or behavior by a specific group of people during a defined period of time. Incentive programs are particularly used in business management to motivate employees and in sales to attract and retain customers. Scientific literature also refers to this concept as pay for performance.
Pig farming, pork farming, or hog farming is the raising and breeding of domestic pigs as livestock, and is a branch of animal husbandry. Pigs are farmed principally for food and skins.
In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money. NIT was proposed by Juliet Rhys-Williams while working on the Beveridge Report in the early 1940s and popularized by Milton Friedman in the 1960s as a system in which the state makes payments to the poor when their income falls below a threshold, while taxing them on income above that threshold. Together with Friedman, supporters of NIT also included James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, Jim Gray and even then-President Richard Nixon, who suggested implementation of modified NIT in his Family Assistance Plan. After the increase in popularity of NIT, an experiment sponsored by the US government was conducted between 1968 and 1982 on effects of NIT on labour supply, income, and substitution effects.
Capitation is a payment arrangement for health care service providers. It pays a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount of remuneration is based on the average expected health care utilization of that patient, with payment for patients generally varying by age and health status.
The lunatic asylum, insane asylum or mental asylum was an institution where people with mental illness were confined. It was an early precursor of the modern psychiatric hospital.
A bug bounty program is a deal offered by many websites, organizations, and software developers by which individuals can receive recognition and compensation for reporting bugs, especially those pertaining to security exploits and vulnerabilities.
Rodent farming is an agricultural process in which rodents are bred and raised with the intent of selling them for their meat. They are often categorised in a sub-category of livestock known as micro-livestock, due to their small size. Rodents have been used as food in a wide range of cultures, including Hawaiian, Vietnamese, French, Indian and Thai.
The Great Hanoi Rat Massacre occurred in 1902, in Hanoi, Tonkin, French Indochina, when the French government authorities attempted to control the rat population of the city by hunting them down. As they felt that they were making insufficient progress, and due to labour strikes, they created a bounty programme that paid a reward of 1¢ for each rat killed. To collect the bounty, people would need to provide the severed tail of a rat. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, sever their tails, then release them back into the sewers so that they could produce more rats.