Perverse Incentives: Nov 26, 2010

We live a world full of perverse incentives.

What incentive does an agency devoted to the cure of cancers, or any other disease, have in helping find a cure for it? Individuals or small groups have a personal incentive in finding a cure, but large bureaucratic organisations do not! The funding or large organisations, charities, government efforts increases in proportion to the suffering. As long as they can make some noises about a cure on the horizon, the money keep on rolling in. More suffering + false hope = more money.

What incentive does an agency devoted to combating illegal drugs have in reducing the use or harm caused by drugs? Who wants a smaller budget, less power and reduced chance to shit on others? I mean, how else can white men relive the days of killing and enslaving black men at will, other than through drug enforcement agencies. BTW, who buys most of the drugs?

What incentive does an agency to help the poor have in reducing poverty or deprivation? Why give a homeless man 40k/year when you can get 300k/year for creating various jobs devoted to helping poor people. Giving the homeless man income support would rob so many social workers and bureaucrats of a reason to have a job.

What incentive do schools have to educate kids and help them become better human beings? Isn’t it more profitable to create dysfunctional, scared, traumatized and abused kids.. I mean think about how much more money can be extracted from others that way.

What incentive does a university have to help students get good jobs, when having them come back and take on more student debt is more profitable? What incentive does a university have to fulfill its original mandates, when show-boating, misleading PR and pretending to do things gets them more money?

All performance metric based pay or funding schemes will ALWAYS result in perverse incentives.

The easiest way to eliminate most perverse incentives is to increase the basic pay or funding level to sufficient amounts and accept that ‘winner takes all’ societies have poor staying power. A decent guaranteed income would also help reduce the factors driving perverse incentives. Eliminating true CONservatives (frauds and sociopaths) would also help.


  1. November 27, 2010 at 11:22 am

    You’re absolutely right. The heart of the problem is the idea that everybody has to work. To see the absurdity of the work ethic, look at policemen, if they figured out a way to stop crime today then there would be no need for policemen. In that case, according to our current culture, all those policemen would have to get other jobs or else would be considered useless bums. But wait a second, in the world where they’ve cured all crime and become “useless bums”, they’ve actually done a lot more good than in the world where they’ve shrugged their shoulders.

    With increasing automation, the status quo can’t last much longer. We’re going to HAVE to figure out a different way of living than ‘work til you die or you’re a bum’, or else soon there’ll be a whole lot of bums!

  2. the dude
    November 29, 2010 at 8:27 am

    funny how you are schizophrenic about wanting or not wanting more government

    The problem is governance, not government.

  1. June 30, 2011 at 4:44 pm
  2. August 21, 2011 at 2:16 pm
  3. November 27, 2011 at 10:26 am
  4. November 30, 2011 at 4:32 am
  5. December 1, 2011 at 6:29 pm

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