Wednesday, April 7, 2010

20. Incentives and The Gospel

Many economists will tell you that the whole study of economics is simply the study of how people respond to incentives. If you take any economic theory or principle you will find at it's core that it is based on incentives and how humans interact with them. Take supply and demand for example. The principle of demand is that at a low price people will respond by buying more than when it is at a high price. Why? Because they have more incentive to buy more because it maximizes their well-being. The same can be said for suppliers wanting to sell more at a high price.

This universal truth can be frustrating for one with morals because it seemingly portrays all humans as selfish. But really, is the Gospel any different? Do people do good to others because they chose to ignore the incentive to get ahead? Looking at it from a more eternal perspective, the benevolent Christian responds to incentives just as much as the money-hungry capitalist. What is different is that they see different incentives. The benevolent see the incentive for eternal life and God's approval weighing more than worldly enterprise. The profit-hungry either don't weigh this as a stronger incentive or they do not believe it to be a real incentive.

Indeed people do respond to incentives as economics teaches. What those incentives are and how much weight they carry can only be interpreted on a personal level.

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