HW #6 Econ 108

A.
The two articles "An Academic Episode" and "The Most Unusual Day" had a similar overall message to both of them. The message was that people respond to incentives and make decisions based on self interests as well as the unintended consequences that occur because of them. In An Academic Episode, the author argues that as a person gets older, he has more free time, but loses his creativity to do research. As a person is young he has a lot of curiosity, but has no free time to do outside research of school. The story then gives an example of how people respond to incentives and base decisions on self interests. The rector of an institute made rules making it easier for a grad student to take the job of a professor by outsmarting him. The only problem with this was that because it was easy for a grad student to replace his professor, the professor began discussing his field with only well informed people. He did not want to make a person under him smarter making it likely that they will eventually take his job. To add onto this, teachers started teaching their students irrelevant subjects so that it would be harder for them to move up in the ladder. There was a fall in graduate work, and the rector took a job as a rector at University of South America. The only rule was that "a man could receive a permanent bonus of any number of points that department chairman deemed fit, when an offer was received from another university. " The rector changed his philosophy so that rather than trying to replace professors with better fit people, he tried to keep the ones who were doing a good job by paying them more. These professors and students responded to the rules by working harder at their job. The incentive to keep or achieve a higher position motivated these people to work harder at their job so that they could keep or increase their pay. The unintended consequence of this was that the professors tried to prevent the students from takign their position by teaching them unimportant stuff and the student tried to take the professors job by going to a school in America so that they could learn more. In The Most Unusual Day, The government made a aw stating that women who gave birth to babies after July 1st 2004 would receive a $3,000 compensation fee. This incentivised people to have their baby July 1st or later so that they would get the $3,000 check. Results proved this point by the most babies in 30 years being born on July 1st. This means that mothers who went into labor a few days before July 1st tried as much as they could to make sure that the baby was not born until that July 1st date. This is a terrible move because the hospitals did not have enough room to compensate for all of these kids and it created havoc. This would also create an incentive for parents to have kids in the future. This could be an unintended consequence if the parents aren't suited to have kids and or are not financially stable enough to support a child.

B.
Do you think that the government thought of the unintended consequence that parents could have kids to get their compensation check, and then put their kids up for adoption after they got paid?

Would an incentive based on discoveries be more efficient than the incentives to work harder that Pinzio used for his workers?

C.
These stories both convey the idea that there are unintended consequences that come along with plans to incentivise people to help them and make them work harder. Story one talks about how when people get older, they lose their motivation to do research. The employer of these professors tried to incentivise these professors by letting them know that they will be replaced if they do not keep up with their research. This hurt them in the end because professors were trying to prevent their students and assistants from progressing so that they could not take their job. In the second story, The Australian government made a law saying that after July 1st, 2004, every parent who has a child will receive $3,000. This incentivised parents to try to delay delivery if they were due a few days before July 1st causing more babies to be born on July 1st than the hospital could handle.