Incentives from an economic perspective
The largest number of economics books begins with the following: Economics is the distribution of scarce resources among competitors. Or, as the methodological books are frequently used, economics is a study of how society determines what it produces and how it produces and who benefits from it.
These definitions are fascinating and are undoubtedly as valid as they can be said, although they have two important blemish, the first is that you can only understand the meaning of these two terms when you study a lot of economics. The second is that they are very limited.
Economics shapes and controls our daily lives, even if we are not aware of it. This science encompasses everything, but that doesn't mean that we are men and women living as economists or that money concerns us, but it does mean that economics should be recognized and inevitable.
Therefore, many people are influenced by the idea that human behavior is predictable. The majority will certainly claim that the reality is not to expect it. It is possible to accept the presence of men and women with good economic logic in the textbooks, but can they actually exist?
Apart from the fact that there is nothing random in the way of ants' living, the essence of economics is to follow the human behavior of certain expected patterns.
When the price of a product, for example falls, people tend to buy more. This does not indicate anything surprising or difficult to understand, yet some people may see it as nothing but scientific nonsense.
Dennis Healy was not convinced of the benefits of economics as a whole, writing in his autobiography: I have decided that while economic theory gives you valuable insights into what is happening, it rarely reflects clear rules of performance. Government, because economic behavior may change from year to year, and varies from state to state.
Haley wasn't as annoying as I think the basic idea that economic behavior changes from year to year and varies between countries, which are not difficult to understand for economists.
Steven Landsberg wrote in his book “The Philosopher of Economics” in short words: People respond to incentives.
Economics at its roots is the study of incentives, how people get what they want or need, especially when other people want the same thing, or need it; economists like incentives, they like to dream about it, to do it and study it.
One of the most obvious examples of incentives is the above-mentioned, when the price of a particular product falls, we tend to buy more. Of course, there are exceptions to this rule, but it is not many.
Important question: Why buy so much of something when it's low price? The majority of people adhere to their income level and what they can spend, and because of this commitment we determine what we spend on the basis of necessity and desire.
Now it's time to discuss a simple puzzle! What determines how our money is spent. Why do we prefer some things over others?! Some individuals may answer these questions: need. But there's another thing that determines how we spend our money: taste, our personal tastes.
In a statistical study of a sample of more than 7,000 households, they were found to spend more on entertainment than on their food.
After that, we still need to answer the question: Why do we spend our money this way? This may sound trivial, but it's filled with a number of economists. They care about the satisfaction or benefit that individuals get from consuming things.
Some thought it was possible to measure this. But the truth is that the law of diminishing marginal benefit does not apply to everything. It is fun to think about exceptions to each rule.
In conclusion can be said, the basic idea is that incentives are an essential part of economics. It can be connected to other areas of life...
Please write: COMMENT in this box to verify that you are human