Essay on Incentives: Motivation and People

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Most decisions are based on the idea of the outcome – a reward or a loss. This reflects how people respond to incentives (Mankiw, 2009, p. 7). The article, based on various researches, shows how people are motivated to alter some parts of their bad lifestyle by the thought of a reward. In this article, emphasis is laid on how financial incentives can lead to improvement in health of the society.

In the United States, people are paid to improve their health. The thought of a reward is a form of encouragement that allows them to grow out of their bad habits more easily. For example, a monetary benefit is added to counselling in order to help some people lose their extra pounds. Based on the outcomes, it was found that those who had access to both counselling and money were more likely to lose weight (13 to 14 pounds) compared to those who had access to counselling only (3.9 pounds). Moreover, once the study program was over, both groups recovered the lost pounds. This clearly demonstrates that people are more apt to do efforts in changing their habits only when there is an incentive which prompts them to act.

Based on this study, some organisations tried to help people quit their addictions by coupling counselling sessions with other benefits. Vouchers were used as an incentive to help pregnant women quit smoking and thus to have a healthier society. A system of points was introduced in rehabilitation centres to help cocaine addicts to have access to their favourite leisure activities and thus, to avoid taking drugs. It was mainly the idea of winning something at the end which encouraged them to quit their bad habits. The idea of winning something at the end is the incentive which motivates everyone in any type of decision-making process.

Some companies have integrated this idea of financial benefits to make their employees attend some health-promoting classes, such as healthier living or walking classes (Kate Dailey, Newsweek, 2010.), to improve their
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