Tag Archives: Incentives

Building Society on a Foundation of Kindness: Parenting Without Borders, Part 9

In the Introduction, we broached the idea that the way other cultures parent might be more “right” than the way that the culture in North America parents, as discussed in the book Parenting Without Borders. In Part 1, we looked at some of the different cultural thoughts around sleep. There was also that stunning example of how it’s normal for babies in Scandinavia to be found taking a nap on the terrace in the dead of winter! In Part 2, we explored “stuff” and how having more of it might not be best for our children. In Part 3, we looked at how different cultures relate to food in the context of parenting. In Part 4, we looked at how saying “good job” to our little ones might not have the effect we think it does. In Part 5, we talked about the virtues of allowing our little ones the space to work through problems on their own. In Part 6, we examined the importance of unstructured “play.” In Part 7 and Part 8, we explored what education is like in East Asia and Finland. In Part 9, we’ll look at cultural notions about rearing our children to be kind.

If you’ve been following this series, no doubt there may have been some things that have made the hairs on the back of your neck stand on end. And if that hasn’t been the case up to this point, it wouldn’t surprise me if this chapter is the one that finally does it.

One of the first anecdotes, while it shouldn’t be, is still a bit shocking [Emphasis Added]: “In 1970, the primary goal stated by most college freshmen was to develop a meaningful life philosophy; in 2005, it was to become comfortably rich.” It’s no wonder that the way we treat each other in today’s society may seem a bit different than the way we treated each other 50 years ago (“-isms” like racism and sexism aside, of course). As a quick aside — how different would society look like today if the goal of 90% of university students was to develop a meaningful life philosophy, rather than to get rich?

Near the beginning of this chapter, Gross-Loh recounts how some of the parents she knows are emphasizing (possibly unintentionally), individuality over community awareness. What does that mean? Well, for example, she retells the story of a mother of a three-year-old rushing to comfort her son after her son had thrown a wooden toy and hit Gross-Loh’s son in the head. The idea behind this is that the other parent was trying to get her son to understand the feelings he felt that precipitated the chucking of the wooden toy at the other kid.

Allowing children to behave as they want to until they feel like acting differently actually makes our kids more miserable and less compassionate. Children who have too few boundaries often flail around for a solid surface to ground them.

Consequently, it’s up to us — as parents — to set these boundaries and more importantly, enforce them. Building on this idea of boundaries…

Believe it or not, research shows that children are born with a sense of kindness, but that’s not enough. If this sense of kindness isn’t fostered and reinforced by parents, it can be “overwritten.” Similarly, research has shown that kids are happier when they’re giving something to someone else than when they receive it. That shouldn’t be too surprising (spending your bonus on your coworker will make you happier than spending it on yourself!). An important aspect of this is incentives. If we reward kids for sharing through incentives, we may unintentionally dissuade them from developing a sense of internalizing the virtue of sharing (thereby dissociating sharing from its innate spontaneity and instead, teaching our children to expect an external reward whenever they share).

Two more things I wanted to highlight from this chapter —

Parents who teach their children to speak with authenticity and honesty but do not simultaneously teach them the art of being considerate send their children the message that it is always better to be honest to your true self even if it means hurting someone.

And finally, a difference in orientation in American and Japanese cultures:

While American mothers often orient their babies to things apart from themselves, such as objects, Japanese mothers more often orient their babies to themselves, encouraging a constant awareness of relationships and the impact of one’s actions on other people.

[…]

In disagreements that warrant adult intervention, kids are asked what they think the other person felt that motivated him.

Can you imagine how different American society would be, if every kid is taught the value and importance of considering the underlying motivations of the actions of their friends and other people?

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A Can’t-Miss Strategy for Making the MLB Playoffs

The baseball season is long — the regular season lasts more than half of the year. And that’s just the regular season. It doesn’t even include the preseason or postseason. As the season spans six months, one would think that it might be hard for some players to keep their focus during the middle of the summer.

In fact, this past Sunday while watching a Blue Jays game, I saw a graphic that depicted the wins/losses of the teams in the division during the last game of the series for the 2013 season. The graphic showed how the other teams were far more successful than the Blue Jays when it came to the last game in a series. As a result, it got me thinking about how to better incentivize players (maybe managers, too?)

My idea: incentivize winning series.

Before I get into the details, I want to preempt the argument that baseball players get paid too much. Grant Brisbee of SB Nation had an all-around great response:

The problem with these comparisons is that baseball isn’t the real world. There is no comparison for baseball. Try to invent one without devolving into ridiculousness. Okay, so there are 30 Walmarts in America. And there are laws that protect Walmart’s monopoly, which means there aren’t any Targets. But those 30 Walmarts can be run only by people with Ph.D.’s who graduate in the top one percent of their class from the top 10 universities. And the Walmarts are in competition only with each other, which means …

… a ridiculous scenario all around, of course. Baseball players shouldn’t be compared to the average American worker. They’re specialized, elite talents in an entertainment industry that’s sitting on a money spigot. And I feel like I should mention this at least once: If the players didn’t get the money, it would just go to the owners. You can argue that owners should get a larger share because they take the investment risk. I’m not sure I’d agree, but that’s at least a consistent argument. Saying that players should make less because it offends your sensibilities isn’t quite as compelling.

Now that we’ve gotten that out of the way, we can focus on how to incentivize players to win series. Well, just before that, let me talk a little bit about why I chose series as a unit of measurement. As there are 162 games in a season, it seemed like incentivizing a player to win every game might superfluous, as players always want to win the game. I chose a series because there are a little more than 60 of them and it seemed like a good intermediate goal (or project milestone, if you want to put it in the language of project management) between winning every game and making it to the playoffs.

Most series are 3 games long, so we can think of winning the series as winning 2 out of the 3 games. If the team wins two out of the three games, then the players all get a bonus. To guard against them mailing it in during the last game, there could be another bonus if they sweep the series and win all 3 games. What happens when the team loses the first 2 games of the series — what do you incentivize then? Well, you’d incentivize not being swept. That is, if the team loses the first 2 games, the players get a bonus if they win the 3rd game and avoid being swept.

For those series that are 4 games long, the same incentivizes for winning/sweeping a series still apply, but we’d add another one — tying a series. That is, if a team is down 2 games to 1 in the series, the players would get a bonus if the won the last game to tie the series 2-2.

Now, my first thought would be to use money as the incentive to win these games, but with the salaries that players have, one may wonder whether there could be enough money offered to actually make the incentives work. The more I thought about it, though, the more I thought that even players with massive salaries could be motivated by money.

Let’s use last year’s MLB salary figures as a basis. Fangraphs had an article that detailed the average MLB salary last season ($3.4 million) and the median ($1.1 million). The median salary is probably a better representation, so let’s use it. The median salary equates to approximately $20,000/week, assuming that players get paid every week of the calendar year. Let’s also assume that there are 60 series in a season. That means, there will be approximately 60 times to offer players this bonus incentive. There are also 25 players that are on the active roster. As a result, we’d have to decide whether we wanted to reward all players or just the players that played in the game.

With 25 players on the active roster, the calculation for offering a bonus of $1000 makes it quite the expense, but not as much as you might think. 25 players getting a bonus of $1000 across 60 games equates to an extra 1.5 million that needs to be budgeted. Given that this is approximately the median salary of an MLB player, one would think that teams could afford this. It’s also important to note that these calculations didn’t include the possibility that teams would win the series and sweep the series. In those cases, players could get a bonus for winning the second game of a three game series and then get another bonus if they win the third game of the three game series. A quick look at the total number of sweeps last year tells us that the average number of sweeps was 7. So, we can add another $175,000, which brings the total expense to $1.675 million. While certainly not a small amount of money, in the context of how much teams spend, it seems like it might be worth it to try and win a few extra games.

Let’s look at the Baltimore Orioles last season as an example. They finished 85-77, 6.5 games out of making the playoffs. Meaning, if they were to win 7 of the games that they lost, they would have made the playoffs. Looking at their streak data from last season, they were swept 5 times. In addition, they were stopped from sweeping a team 8 times. Together, that’s 13 games. If the Orioles could have won half of those (6.5, so let’s round it to 7), they would have made the playoffs.

Put differently, if they would have employed this strategy and it was successful at least 50% of the time just in the series where they almost swept a team and were swept, they would have made the playoffs.

The Problem With Facebook: Is It Really Out of Room to Grow?

I rarely read the front page of YouTube, but today when I typed in YouTube to my address bar (with the intention of finding some music to listen to while I worked), one of the videos I saw on the front page was titled “The Problem With Facebook.” Truth be told, I thought it was a video by MinutePhysics and thought that there was going to be some scientific explanation of Facebook’s problems, but it turns out the video was by 2veritasium. (I guess MinutePhysics may have liked the video, so that’s why I saw their name or maybe they had just come out with another video, who knows.)

Anyway, if you have Facebook (or had Facebook) or know anything about Facebook, I’d say it’s worth the 6 and a half minutes to watch it:

I’m not sure what the fellow’s name is, but it reminds me of when George Takei went on a bit of a rant about Facebook not letting him reach all of his fans on Facebook. At the time, I think I still had a Facebook profile (rather than the page I have now) and I thought that was strange that your posts weren’t reaching all of your friends — by design.

The fellow in this video makes that same point, but he does it in a more thorough way than I remember Takei doing it (which is not to say Takei didn’t do it), and he also juxtaposes Facebook with YouTube. He makes a rather compelling argument, but something I don’t think he highlights is that he kind of has a vested interest in YouTube being more successful — his videos are hosted on YouTube! Now, this doesn’t really take anything away from the argument — it’s sound — but I think it’s worth noting.

Throughout the video, he talks about the incentives. I wonder what Michael Sandel would say about the incentives in this situation. Would he say that the incentives have been perverted? It’s tough to say because Facebook is trying to make money and there’s nothing inherently wrong with that, but I wonder if maybe they’ve strayed a bit too far from the original purpose of the site.

There’s one last thing I want to highlight from the video — in part — because it dovetails nicely with something that I’ve been trumpeting on here for awhile. He argues that Facebook has already maxed out, with regard to the amount of time people spend on the site per day (approximately 30 minutes) and that Facebook has already reached just about everyone in the developing world. When it comes to online video, however, he argues that there is still lots of room to grow based on the fact that people still don’t watch that much of it when compared to television. I might not put it in those words exactly, but I think he’s on the right track.

If even the President of the United States knows that Facebook is becoming or already is unpopular with young folks, I have to think that the smart people over at Facebook know this, too. As they’ve got a fiduciary duty to their shareholders, I’m sure they’ve been hard at work trying to figure out just how they’re going to capture more value — translation: how they are going to make more money.

Who knows… maybe Facebook will soon go the way of the social networks that have gone before it. Remember MySpace?

What Do You Do When You’re THAT Much Better Than The Competition?

The Miami Heat have won the last two NBA championships and they’ve been to the finals for the last three years (losing in Game 7 of the finals before winning back-to-back championships). So far this year, they’re one of two teams in the Eastern Conference (as of this writing) to have a winning record. The other team being the Indiana Pacers, whom many think will challenge the Heat for the best team in the Eastern Conference this season. If we take a peek at the Western Conference, we see that there are quite a few more teams with winning records. In fact, there are five times as many winning teams in the West than in the East.

I’m not here to talk about the parity in the NBA conferences, even though it’s clear that there is, but instead, about the Heat and their competition. That is, they’ll play most of their games against the Eastern conference, of which there are only two teams with winning records. Given that the Heat have been an elite team for the last three years, it’s not surprising that a they’d have to resort to “games within games” to stay focused.

After reading that article on SB Nation, I thought to myself how difficult it must be for the Miami Heat coach (Erik Spoelstra) to keep his players focused, not only as each season wears on, but as each game wears on and each quarter wears on. The Heat have played 23 games so far this season and have won 17 of them. While they’re not in first place in the conference (that title belongs to the other winning team in the East, the Pacers), they’re well above the 3rd place team in the conference. For a team that plays that much better than its opponents on a nightly basis, one can see how it might be easy for the players to lose focus. Heck, it’s possible that a few of those six losses came as a result of the team losing focus after having outplayed the other team through the first few quarters of the game.

The reason I’ve raised this issue is because I was thinking about the success of a “games within games” strategy. For instance, let’s say that the “game inside the game” for today’s game is that we’re going to try to get the ball to the guy down low. That is, the strategy is to beat this team by using a certain player in a certain way. I wonder what happens when it gets down to near the end of the game and the score is close — do you abandon that strategy? And if you do, how do you get the players who hadn’t been as involved ready to go now that it’s the key time in the game?

A games within games strategy can be successful, but I worry at what cost.

This also reminds me of one of the chapters in Michael Sandel’s book that we reviewed about 6 months ago — the idea of fines and fees. In particular, the idea that parents pay their kids to read. By doing so, parents are incentivizing a certain behaviour. The worry, from some, is that by paying their kids to read, the kids will no longer derive the same joy out of reading if there’s no incentive involved. If we apply that to this situation, I wonder if the strategy of using the one player in that one game might pervert the incentives for the team. And not just in that game, but over the long haul. Maybe the players don’t then have the same incentives as before when there aren’t games within games.

Of course, I’m not an NBA basketball coach (or even a high school basketball coach), but I think it’s still an idea worth considering.

Is It Time to Pay Politicians More?

A few months ago, I saw this very argument made in Slate. At first, I’m sure you’re doing a double-take? Why would we pay them more? They are hardly doing the job that we elected them to do in the first place. Why would we reward failure, stagnation, and an inability to get stuff done? That’s absurd!

All natural reactions, yes, but when you take a second to think about it, the idea isn’t that bat-crap crazy. For instance, consider the Governor of Virginia, Bob McDonnell. Josh Barro over at Business Insider makes the case that the Governor is underpaid. Why? Well, look to the incentives! The Governor of Virginia has a salary of $175,000, which is in the 90th percentile for Governors in the USA. That’s certainly a lot of money — almost triple the median income in Virginia. So, again, you may be thinking, why would we pay them more?

Well, consider the kinds of people that the Governor interacts with on a daily basis. Plutocrats. Governor McDonnell, on a daily basis, interacts with people who have income/wealth that far exceed the Governor’s “measly” $175,000 salary. You may be thinking, why is this a problem if the Governor got into politics for purely altruistic reasons?

Even if the Governor did do such a thing, research tells us that unethical behavior has to do with the kind of person you are and more to do with the situations you find yourself in. For instance, you may be the most ethical person in the world, but if you happen to find yourself in a bind financially and a whole host of other variables are weighing on you, there’s probably a situation that you may find yourself in where overlooking a conflict of interest may seem like an okay thing to do.

That’s the argument for increasing the salaries of politicians — to remove the incentive to be unethical. Of course, there’s still likely to be unethical behavior conducted regardless of what the salaries are raised to, but it may eliminate some of it. How much, I don’t know. What would be a fair salary?

The article in Slate discussed Sinagpore, which is known for being one of the most efficient governments in the world. He explained that in Singapore, the Prime Minister earns more than four times the salary of President Barack Obama and the President gets $400,000 a year! Government Ministers (akin to cabinet Secretaries), earn over $1 million a year. The highest paid cabinet Secretary (Secretary of the Treasury) gets approximately $190,000. So, government Ministers earn more than 5 times as much as their American counterparts.

I’m not advocating this particular raise, but I think it’s a conversation worth having.

I suppose the other option would be to remove the influential plutocrats from the equation. Although, I don’t know that with the American political system arranged in the way that it is, if that’d be constitutional. Larry Lessig, someone who’s been working tirelessly on the option of getting money out of politics was asked what a question about salaries for Congress. I’ll leave you with the question and his answer:

Question: You advocate in your book that congressmen should be paid much more than what they are right now (about $175,000/year). How much do you think they should be paid to make them lose the incentive to become a lobbyist? Does 250-300k sound better?

Lessig: Oh please don’t out me on this. Ok, but DON’T TELL ANYONE I SAID THIS: They are lawmakers. Why aren’t they paid as much as a first year partner at a DC firm? In Singapore, gov’t ministers get paid $1 million a year. Where is corruption in Singapore. NO-where.

Chapter 2 – Fines vs. Fees: What Money Can[‘t] Buy, Part 2

In the first post in this series, I chewed on the material from chapter 1 of Professor Michael Sandel‘s book, What Money Can’t Buy. The first chapter was all about jumping the line (or budding, as I remember it from my elementary school days). In Chapter 2, the theme was incentives.

I had finished reading chapter 2 a little while ago, but I’d been busy recounting the bits from that paper over the last several days, so I’d sidelined a post about chapter 2. Now that I’ve finished the paper (A Collection of Scriptures for Guidance), I thought I’d chew on the material from chapter 2.

As I said, the title of chapter 2 was incentives. There were a few things that I wanted to highlight (though, I thought the whole chapter was fascinating). In particular what stood out to me were three things: incentives (and the perverting of incentives), fines vs. fees, and paying kids to read. Let’s start with the last one, which will link to the first one.

Nowadays, some parents pay their kids to read. In fact, some schools encourage the idea of rewarding children for reading. At first, this seems like a great use of the free market, right? Incentivizing the reading of books to get kids to read more books. Except, what if part of the pleasure of reading is the pure desire to read? By paying kids to read, it robs them of that intrinsic motivation. In fact, by paying kids to read, it could de-incentivize them from reading when there is no reward involved (perverting the incentives).

In thinking about this example, it made me contemplate just how hard it can be for lawmakers (i.e. Congresspeople, Members of Parliament, etc.) to write legislation that will properly incentivize the citizens to act in a way that is best for themselves (and the town/city/county/country, etc.). Paying kids to read seems like an easy way to get kids to read, but when one plays out the incentive and considers the unintended consequences, one can see how this perverts the intent of getting kids to read.

The next piece I wanted to talk about was fines vs. fees. This part was really interesting to contemplate. From the book:

What is the difference between a fine and a fee? It’s worth pondering the distinction. Fines register moral disapproval, whereas fees are simply prices that imply no moral judgment. When we impose a fine for littering, we’re saying that littering is wrong… It reflects a bad attitude that we as society want to discourage. Suppose the fine is $100 [for littering] and a wealthy hiker decides it’s worth the convenience of not having to carry his empties out of the park. He treats the fine as a fee and tosses his beer cans into the Grand Canyon. Even though he pays up, we consider that he’s done something wrong. By treating the Grand Canyon as a dumpster, he has failed to appreciate it in an appropriate way.

Sandel goes on to talk about how this fines vs. fees attitude can also be applied to disabled parking spaces, speeding, the subway/metro, renting videos, and many others. I found this discussion especially interesting because of the moral-ness to it. When one is creating fines, one is (whether one means to or not) using morals. We don’t think it’s morally right to litter and that’s why there’s a fine for littering. Paying to park your car in a garage is a fee.

There’s one more passage that I think was really important to remember from this chapter:

But why does this mean that moral philosophy must enter the picture? For the following reason:

Where markets erode nonmarket norms, the economist (or someone) has to decide whether this represents a loss worth caring about… The answer will vary from case to case. But the question carries us beyond predicting whether a financial incentive will work. It requires that we make a moral assessment: What is the moral importance of the attitudes and norms that money may erode or crowd out?

If you liked this post, you might like one of the other posts in this series: