In the book Freakonomics many underlying themes are explored in the first chapter, such as subtle cause and effect relationships, and the value of information. However, if there was to be one theme that would be more important than all others it would be the exploration on incentives. Levit writes, “Incentives are the cornerstone of modern life,” (Levit 12). He is basically saying that all actions have incentives behind them, and that incentives are what cause to people to either perform, or withhold and action. Levit breaks it down into two main types of incentives. We can see these in chapter one. There are economic incentives, causing people to abstain from homicide, and causing teachers to cheat on high risk tests, and moral incentives, causing people to pick up their kids on time from day care. There are also examples of this in real life like the economic incentives of doing this paper, or the moral incentives behind not cheating on this paper.

            First, Levit explores the political incentives for why people don’t commit homicide. On page 19 he offers a table of number of homicides per 100,000 people in various European countries over the pas 700 years. Some numbers like in Italy offer extreme drops from numbers of 56 in the 13^th and 14^th century, to a mere 1.5 in the later half of the 20^th century. The question is what causes this?  Levit writes, “The chance of going to jail- thereby losing your job, your house, and your freedom, all of which are essentially economic penalties- is certainly a strong incentive.” People know that being part of a society comes with certain obligations, mainly fallowing the law- people also know that when they break these obligations there are repercussions, you go to jail. As we can see from the graph, as law enforcement goes up, and the threat of going to jail becomes more prominent, the incentive to kill someone, or commit any crime is reduced, by the stronger possibility you go to jail. The 13^th century there was a higher incentive for people to kill and commit crimes, because there were fewer people arrested for it, and there were fewer negative impacts. Thus, the conclusion can be drawn that people act based off of incentives. The only reason the numbers would have dropped is that people fear the repercussions, and negative economic impact which is enough incentive to abstain from doing an action.

            Next, Levit brings up another example of an economic incentive of why teachers in Chicago would cheat on high risk state tests. It seems ridiculous that teachers would have their students cheat on state test. At first glance, it seems as if they have nothing to gain, but that’s where hidden incentives lie. Levit writes on page 32, “An analysis of the Chicago data reveals evidence of teacher cheating in more than 200 classrooms, roughly 5 percent of the total…What are the incentives of a cheating teacher?...It was the teachers with the lowest test scores who were most likely to cheat,” (Levit 32). Levit also mentions that in California there was a $25,000 bonus to teachers who were able to raise test scores. Levit contends that the reason teachers cheat is one, to keep their job, and two to get a bonus from high test scores. Teachers will do anything from write the answers on the board, to change the answer keys after students leave. The reason is quite clear, they want the money. There would be no other reason why they would cheat. In 1996 before the test was giving out money to school districts that did well there was far less cheating. When the new economic incentives were introduced to the schools, there was a spike of cheating. Logical progression of thought would have us believe that the school wanted money, so they offered money as an incentive to teachers to do well, who then cheated to get the money. Again, we are able to see another example of how incentives cause us to do things we wouldn’t normally do. Everything is done for a reason.  

            Next, Levit is going to bring up the idea about morality, he observes how moral incentives cause people to pick up their children on time from day care. A test was carried out on a day care center in Israel. The owners were concerned about how many kids were picked up late, so they decided to run a test to see if causing a $3 penalty would be enough of an incentive to get parents to pick up the kids on time. The results were counter intuitive. There were actually more kids who were picked up late. Levit describes the reason for this, “For just a few more dollars each day, parents could buy off their guilt,” (Levit 20). Before the $3 incentive was added most parents would pick up their kids on time because they felt bad, they inherently thought it was immoral, however, now they felt like it was ok to do this because they were paying for the extra time. It may have seemed like stealing to them before, but now it was all balanced out. This brings out the core in Levit’s incentive argument. Moral incentives are greater than economic incentives. He brings up another example on page 20. He writes that a blood donation that offered money to those who donated actually received less blood than a blood drive that didn’t. He writes to explain this concept, “When people are given a small stipend for donating blood rather than simply being praised for their altruism, they tend to donate less blood. The stipend turned a noble act of charity into a painful way to make a few dollars,” (Levit 20). Looking to the blood drive example, we can see that acting in a way we deem to be moral is worth the pain, but an economic incentive is not. Going back to the cheating teachers, that was an extreme case. The reward was so high, and risk seemed very low, that the teachers cheated because every once in a while the opportunity cost is just too high. They may have even lost their jobs for poor teaching. It was an extreme example, and cannot be looked to on the argument of which incentive is greater on balance. Levit will imply that moral incentives are greater than economic incentives, however, the point still remains that people will act based off of incentives. This can even be applied to real life.

            Personally, I am driven by incentives. Why am I doing this paper right now? The answer is simple. I want to get a good grade in this class, I want to have a high GPA, I want to go to a good college, and I want to have a good career and make money. School is a lot of work, and typically students don’t just do assignments for the sheer enjoyment of it, we do it (that is if we actually do it) for the economic incentives promised to us. If we do well and go to college we will make money and in turn be happier, making the work worth it in the long run. By writing this paper, I am only affirming the idea further that people act based off of incentives. The opportunity cost of me being here in school right now is sleeping in a nice, warm bed. However, I come to school because I want to do well and have a good job, therefore I forgo the extra sleep to come to school, write this paper, and hold on to the whim that I will be better off for it.

            I will give out full disclosure that I have not cheated on this paper. There is a moral incentive for me not to cheat on this paper, but there is also an economic incentive for me to do well on this paper, which prompts the idea to cheat to get ahead in school. There exist two incentives to do two opposite actions. By not cheating I have chosen to follow the moral incentive, because the moral incentive on not cheating outweighs the fact that I may do a little better by cheating. This paper in of itself affirms Levit’s idea that moral incentives are greater than economic incentives. Regardless, the fact that I am doing this paper to begin with proves that people act based off of incentives.

            Levit does a very good job getting his point across. His clear underlying theme is that people act based off of incentives. He brings in many examples like the homicide rates, the high stakes test cheating, the day care example, and the blood drive. Through the example he is able to prove that on balance, moral incentives outweigh economic incentives. He also makes it relatable back to the reader, seeing as I was able to come up how I was acting off incentives even as I wrote this paper.