Incentives are for losers

The fish metaphor has the same issue. The people dying on the sidewalk outside his conference have seen worse than he has, they don't lack moral clarity but rather the freedom and capital to rebuild their lives around it. His essay treats seeing the fish and acting on it as a single moment when the acting part requires you to have capital/social safety net.

Where a person living in abundance can choose to ignore monetary incentives, most people cannot. If you want to make behavior X be what a broad selection of people do, the only available way today is incentives. And a lot of problems we face today are exactly this sort of collective action problem - recycle, vote for good leaders, don't shit in the well.

Yes, it would be better that we lived in a world where most people were not "losers" (I.E. needs to work for money), but we're certainly not there yet.

The Wikipedia article [0] is not yet great but does give the two classic examples of "second-price auctions and a simple majority vote between two choices". The Gibbard–Satterthwaite shows the difficulty in extending this to more choices (in that Arrow's theorem sort of way).

The best thing I've read on this stuff is Alvin Roth's "Who Gets What and Why" (2015) [1] which is worth a read in any case. Repugnant markets!

[0] https://en.wikipedia.org/wiki/Incentive_compatibility

[1] https://en.wikipedia.org/wiki/Alvin_E._Roth#Market_design

"The basic strategy we use for raising children, teaching students, and managing workers can be summarized in six words: do this and you'll get that. We dangle goodies (from candy bars to sales commissions) in front of people in much the same way that we train a family pet. The quick fix of rewards may seem to be effective, but manipulating people with external incentives actually kills their interest in what they are doing and lowers the quality of their work."

One individual can ignore incentives. The point of that diagnosis is that you can't build a system on the premise that most people will behave well despite incentives, because many won't. It's a point about systems, not individuals.

MANY people have dealt with terrible project managers and therefore assume all project managers are bad. This is because great project managers are very rare.

The same is true about incentive schemes. Most of them are improperly designed and/or get hit by Goodheart's law. [0]

As a counter point, this article [1] about designing incentives for farm labor is excellent and shows that with careful thought, incentives can dramatically increase output.

I've also been reading Deming's last book [2] and he is VERY against sales commissions. Some of this is probably bad design (e.g. 100% of the commissions for a sale go to one person) but I do feel he makes a valid point that everyone at a firm should benefit from helping the customer. Highly recommend it as an alternative to the more mainstream business books.

0 - https://en.wikipedia.org/wiki/Goodhart%27s_law

1 - https://archive.is/https://slate.com/culture/2008/08/an-amaz...

2 - https://amzn.to/4wfAAjU

Incentive systems often suffer from error and excessive lag between the output and the measurement of the output. This is a known problem in quality control. See Deming, the Toyota Production System, and continuous improvement. Even if you're measuring the desired output in a reasonable way, lag in that measurement will cause oscillation, and may prevent convergence. School grades and work performance reviews are examples of systems with high lag between output and the measurement of output. That happens even if the metrics are good, but not immediate.

If the measurement method is noisy, it may have to be filtered before use. This adds to lag. (Think about how a trailing moving average works.) Many incentive systems also have that property. School tests are intermittent noisy measurements filtered out by averaging.

These are known problems with incentive systems, but not well-known problems. Even if you're measuring the right thing, you can hit these problems.

What lovely writing.

In this society, I'm a loser precisely because I ignored incentives. I think we live in a failed society so I don't mind that much being a loser in such society. I don't think I would feel any pride being a winner... However, I would very much appreciate the financial comfort of not having to participate in it! So that would be the advantage of being a winner.

It's the great irony; the winners who have the option to not participate, want to participate... And the losers who ignore incentives find that they are forced to participate sooner or later!

Right now I think my current job is probably unethical. Though most people would probably not think so. They just didn't look for the devil in the details.

Most people are lucky to have been following incentives subconsciously, believing that incentives align with economic efficiency and, therefore, moral virtue. I was not so lucky to believe that. Now I have to do stuff that I know to be unethical to free myself. Is this the definition of corruption? Isn't it a worse form of corruption if you don't even bother trying to understand the impact of what you're doing? Or worse, you deceive yourself?

The pathologies in our collective decision making at the political level caused by the inability of so many people to give credence to the power of incentives is the problem that needs to be solved, even if, in the author's weird online niche composed of a few thousand people, incentives are occasionally wrongly taken as a moral justification for bad behavior.

I also think it’s more like delayed gratification. Good incentives are for good people bad incentives are for fools. The further you can push back short-term incentives in favor of long-term, the better your life will be. Like we all “know” that love is better than coffee but in the morning many of us would/do choose coffee. Food, drugs, porn all short-term pleasures are “less good” than prosperity, but we often choose the quick dopamine hit over the long, difficult road

But this misunderstands incentive based analysis.

The point isn't just that people naturally follow incentives, but that those who refuse are punished and no longer in a position to affect the world.

Taking a principled stand is great and all, but if the result is simply that you get fired and replaced by someone better at following orders, you didn't really fix the problem.

Of course it's more complicated than that. Certainly other people being willing to do evil is no excuse to do evil yourself. Maybe your principled stand inspires others and you start a revolution or something. But that's rare. In the average case incentives win. Which is why if you want to actually change the world for the better you should attack the incentives not the individuals - individuals can be replaced, but millions are willing to follow incentives.

-----

The rest of the article seems to be about developing your own morality, but morality is really just yet another incentive.

No, we don't.

> Everywhere you look, people are being rewarded for doing the wrong thing.

And, people are also being rewarded for doing the right thing. Don't conflate the two.

Just because some incentives are rewarding the wrong behavior doesn't invalidate the concept. We're surrounded by incentives at work in every part of our life.

Fiat money only works because we are incentivized to believe in it.

Democracy works because we're mostly incentivized to support it.

Governments, countries, companies, parks, global trade, science, and shipping only work because of the complex web of positive and negative incentives we've built up to support them. They're not perfect, and never will be. And they also shouldn't be perfect (despite our natural inclination to want the "perfect"). The worst atrocities humankind has seen were driven by the pursuit of perfection and purity.

The cobra effect is what happens when you choose your incentives poorly. That's not a fault of the concept.

To me the analogy of the monstrous fish is also very reminiscent of Nietzsche's story in "the gay science" of the madman exclaiming in horror at the public square:

> "God is dead. God remains dead. And we have killed him. How shall we comfort ourselves, the murderers of all murderers? What was holiest and mightiest of all that the world has yet owned has bled to death under our knives: who will wipe this blood off us?"

Realising this horrid truth opens an opportunity to defy the structure of society and follow one's own convictions.

But as augment_me says above, not everyone can bear the cost of ignoring incentives. I think all of us have stories where we had a good conception of what the right thing was, and wanted to do the right thing, but money trouble or job security meant we had to follow bad incentives- I certainly do.

I agree with and enjoy the overall sentiment of this piece. Incentive are fit losers. BYO incentives is the way to go.

That said, IRL, the structural advantage of external incentives... especially artificially designed ones... Can be near impossible to overcome.

Let's say you are a researcher working in one of the fields tested by 21st century mushiness. Replication failures. P-hacking. An unstructured stream of published research adding up to noise.

This outcome is not just because of publish-or-perish, or other incentive structure. It's also because the field is just hard. Harder than it seems it should be, intuitively.

It seems like science should have uncovered a decent, workable "theory of nutrition" or a promising pathway to one. It hasn't. That means thousands of researchers are working in their little corners... And when they look up from their desk there is no big picture forming. No big project that they are contributing to.

Maybe we just need a new theory, when you research methods.. or something. But... we don't know what that is.

Intrinsic motivation vs academic grind... Facing a near impossible challenge. A good chance of modest success within the pigeon-incetives paradigm... Vs near-guaranteed failure of an alternative, intrinsic motivation path.

Even if you take the intrinsic motivation path... There will probably come a point where you have invested years, achieve nothing... and proudly refusing to publish banal papers like everyone else will seem like folley. This person probably just leaves the field.

Startups are different than the corporations they become. 19th century science is different to modern academia. Trying to replicate qualities is always sysephean.

I might be nitpicking -- it makes a lot of good points -- but this is the key idea, and I think it's important to get it right.

As thinking individuals we can and should use our awareness and courage to make biggest "good" choices we can bear to. We can't all be zero-waste vegan community organisers lobbying for renewables and free education/healthcare, but I doubt living life with the blinders on leads any kind of moral or spiritual growth or fulfilment either.

Very few people are self starters, I’ve become fixated on increasing the productivity of the population. Anyone excluded or encumbered has things to address why that is, and then add them to the productivity machine. At one point women weren’t included, other marginalized people are excluded, some populations have a tendency to suicide unless we affirm their feelings and then they are productive. All of that fits within my philosophy and makes the tweaks to the workflow easy adopt, if it means more people are included in the productivity engine.

Most of the comments are one level deeper “lets condition all of society to be self starters” with no proposal on how to do so

Incentives it is

I like the article overall but this part seems overly uncharitable. I think the next step of your development would be to have your own incentives without looking down on other's who you think lack their own. You should be able to know who you are without shitting on others.

Don't like smoking? Try out right banning it. It's impossible. You have to fight the lobbyist, the addicted consumers, the workers employed by the industry, ... Slapping a tax on it is much easier. A soft NO that's giving everyone time to adjust.

This ties in with the Mental Immune System, and the Emotional Cost theory of perception.

Kudos for the fish analogy though, that's much better.

So the author is making some point about wrong incentive models and meta models.

Since the author seems genuinely baffled, the answer is "because they are just bad people". They're bad people, nothing we can do will fix that they are bad people, it's so their fault, so there's no need to consider incentive structures or anything like that. They're just going to have to be better people and the things providing bad incentives have no fault or responsibility for the bad behavior and/or bad outcomes.

The sad and ugly truth is that there's is a certain amount of that in play in the real world. However if I could only pick one of the two extremes, "it's all incentives" works be the more productive one. It's not the whole truth but I do think it is substantially closer than the other extreme.

First, there's the false dichotomy. Only psychopaths do things purely and only for the incentives. Others modify their behavior in incentive optimizing ways, but within the constraints of what they think are right and wrong.

The author brings the confidence of the newly religious. They have found some great truth, seem the great fish, and now anyone else who has not reached this acceptable level of fervor is, in their words, a loser. Perhaps the fish the author has seen is also not that great? Compared to the vastness of the ocean? And they just haven't seen one of the many even bigger fish yet? And then may someday realize that all fish look different to all people and some people have found their fish and it's different from your fish, it may even look not that great to you, but what matters is how it looks to the beholder.

What is the author even arguing for? Because it comes off as "care more".

This is a key difference between Left and Right in the US. (He's writing before Trump, notice.) Once you see this, it's obvious. Strongly recommend the book.

This doesn't mean we should all attempt to do the highest possible paying job available to us, but it does mean there's a genuine loss to society if (say) a high paid software engineer decides to quit and start a bike repair shop i.e. the economic pie will be smaller an so will the tax base. So when making the decision we should at least be conscious of this.

As an economist, I do kind of agree with the premise of the article, but in a different way. As consumers in particular, we can do much better than following incentives.

For instance, we can use the car less, even if it's a bit inconvenient. It's much nicer to see more people out walking, on their bikes or on the bus, leads to less noise and congestion. So there's a positive externality. Or I could buy a smaller car, even though bigger one is more convenient.

Similarly, if you're lucky enough to have a high paying job, you can buy all sorts of status symbols. Or, you could choose to consume less than you earn, and give the difference to charity, or invest in something of social value.

Whether you agree with this or not, economic theory provides a clear framework to think about all of this, both the price signal and the difference between private and social incentives. What bothers me (as the article touches on) is that people often have a simplified view of economics which is essentially that 'market incentives and price signals broadly lead to good outcomes (or at least, better outcomes than communism!), and therefore economics always morally endorses buying things at market prices'. There's nothing in economic theory that says that spending £50k more on a car because it's got a fancier brand is a reasonable moral choice.

It is very typical that when someone gets on drugs even the father of the person stops trying to help after several failed trials. Only the mothers stay. And it is so painful to watch. The kind of abuses mothers tolerate from their children.

Substances destroys the typical regulating behaviour of the brain. They literally can't see the harm they do to others. You usually can't help them until they hit rock bottom and open a window for you to intervene.

For helping you need knowledge and training and "trying to help" without it could do more harm than good.

About the moral obligation to help the drug addicts, as "social justice", I would call this "injustice". Here is the typical situation: Someone takes drugs in a social group because is "cool". In the same group there is someone that decides not to take them. He is humiliated by the group and it takes a lot of work. One of the members of the group gets addicted, do terrible things and asks for help.

It is usual that the one that did not take drugs, or the brother in the family ask the question "why are you helping this person that decided to go this way herself?" "Why are you expending like 10x more resources in this person that did everything wrong than in me when did everything well (studied instead of earning easy money selling drugs, that had to withstand the pressure and humiliations by the group).

Drugs are super expensive and addicts will do anything to get their dose, supporting the addicts usually takes all the resources from a family, neglecting the resources to other members of the family. If the State provides the support, the same thing happens. Should the State spend exorbitant resources that the rest of the society has to pay taking the resources from everyone that needs them?

1) Bribe/corruption is okay: Do this (eat broccoli, finish homework, etc) and I'll give you an incentive/bribe (candy, play time, screen time).

2) Magic: Kids are scientific and curious, they ask millions of questions. Explain everything away by magic (fairytales), religion, god, govt, economics, etc. Nobody has the knowledge or patience to deal with the continuous stream of questions.

We train kids to accept these things as defaults of culture.

The only parent that comes to mind who seems to have understood this is Richard Feynman's dad who taught him to think like a scientist, question authority, etc: https://www.wondersofphysics.com/2021/06/what-did-feynman-le...

This is actually a fairly recent concept.

For a long time, humans across the globe have believed that life had a purpose, but until the 18th and 19th centuries, the belief was more or less that the purpose was dictated by God, the universe, etc. That there was a purpose that applied to everyone, not that everyone had to find his or her own purpose.

> That means refining your sense of right and wrong and figuring out how you, personally, can increase the right and decrease the wrong.

The problem with this is that the road to hell is paved with good intentions. Well-meaning people who believe strongly that they are increasing the right and decreasing the wrong are capable of creating many problems. And sometimes, you get really sick people who think they're well-meaning and their "right" is everyone else's "wrong".

> But over the years, as I had the opportunity to meet some of these captains of industry, these Grand Pooh-Bahs and Distinguished Scholars, I’ve realized how wrong I was. They only seemed enviable because I was looking at them from a distance, so all I could see was what they had. Up close, when you can see what they are, it becomes clear that only a few of these ladder-toppers are indeed wise and cool. More often, they’re sniveling little twerps. They’re spiritually chinless. They have no convictions, no passions, no purpose other than ladder-climbing. It’s sad to watch them, these people who have everything except the one thing that actually matters.

I'm personally not a fan of the Elons and Zucks of the world, but going around categorizing people into groups like "spiritually chinless, passionless, purpose-lacking sniveling little twerps who only care about getting ahead" probably isn't healthy.

Has the author considered that many of these people simply have beliefs, passions, purposes that don't align with his and that, if asked, they might speak poorly of his beliefs, passions, purposes?

We can debate whether or not these people are, in the final analysis, ethical, but I don't think reducing them to this helps the author's argument.

> Why spend your days wondering about right and wrong, good and evil, sacred and profane, etc. when you don’t have to?

Most people in this world don't have the luxury of sitting around and figuring out all of the world's mysteries and solving all of the world's problem.

> I saw my fish in 2020 in San Fransisco, during the annual meeting of the Society for Personality and Social Psychology.5 Inside the conference hotel were dozens of talks about stereotyping, prejudice, inequality, and so on. That had never struck me as strange until that year, when outside of the hotel, which was in the middle of SF’s Tenderloin district, people were sprawled out on the sidewalk, dying of overdoses. Scholars were scurrying past homeless people to give talks on social justice, which is ironic because “scholars will scurry past homeless people to give talks on social justice” is literally the main finding from one of the most famous psychology studies of all time.

The author paints his experience as some sort of Siddhartha-like epiphany. The reality is that lots of people have seen what the author saw, and worse. Any many were affected by it. But just because they didn't stop and play Jesus (which the author apparently didn't do either) doesn't mean that they didn't notice and weren't affected.

The author seems to be assuming that he's one of the few people who isn't oblivious.

> When I meet someone of uncommon integrity, someone willing to defy the incentives at any cost, I find they almost always have seen the fish—big, hulking fish, far larger than any I’ve ever encountered. They have undergone some kind of moral reckoning that undid their illusion of philosophical depth and gave them the chance to forge their own values.

Like what? The article is really lacking in specifics and it seems like it's a reflection of the author's experience and views, which he projects onto the other 8 billion people on the planet.

In my own experience, which includes having emigrated from the US to another part of the world, most people are just trying to get through the day, pay their bills, provide for their families, find peace and contentment, etc. They're not morally-corrupt zombies who, at best, are oblivious to the suffering in the world or, at worst, bad apes chasing free bananas. They're just people who don't have any illusions that their lives and powers are bigger than they really are.

First I completely agree with the author that you have to "bring your own incentives" instead of trying to discern them from the environment. In fact conversation is often confused when people just try to figure out the incentive structure.

Consider this most existential topic - whether an individual (and therefore society) is capable of producing children. On the "no" side you are readily supplied with a list of incentive-shaped rationalization: eg it's too expensive, climate change, etc. On the "yes" side people just aren't evaluating those dis-incentives - they come in with a value-based motivation (children are important, children are the future) and act of out that - with the "obstacles" being something to overcome not something to base the decision on.

So that's an example of where coming with your own incentives is key. Existentially.

On the other hand aligned incentives matter. For example when I was growing up I was "academically and engineering minded" which is that I enjoyed useful learning and demonstrating knowledge through practical application. And luckily both my family and most teachers gave good vibes about this in return. I'm sure that helped.

So maybe the most critical thing is to bring your own incentives but the second most critical thing is that they align. For example, I bring a high-ownership perspective to my job - which basically means I try to do what's actually most existential or strategic for the business. I just wrapped up 4 years in a FAANG where the incentives were aligned very much away from that, to the point where a VP had to tell me that she could only reward me for things that aligned specifically to my role profile, not for reaching out beyond the role to actually move the needle (btw totally understandable why big companies have to operate that way - but an example where "good" and "incentive" were not aligned.)

So I was faced with a choice - "die on the hill" for what I know is right, or follow the incentive structure. What did I actually do? Bail for a smaller company where I routinely work with the CEO and senior leadership directly and there's no gap between "what's right for the business" and "what I should be doing"

So still being your own incentives is key - but secondarily you (a) want to be in a place whose incentives reflect what you think is right already and (b) create such an environment for the kind of people you want to be and work with.

As an analogy you want to have your own compass for where you want to go. But ideally the wind and the tides are helping you go in that direction. But shoueknthe winds and tides shift your direction doesn't. Or shouldn't. Back to my first example, think about all the people who are chosing to not have a family just because it's not enough vogue today and there's no peer pressure. It's a sort of self-contained extinction event because someone doesn't have the instinct to fight that momentum. I use this example because it's hard to think of something more existential.

> then you’re a dummy and a schmuck

Who cares what names you call. I would be more powerful and comfortable in this world. While you spend your time calling names that would have zero effect in this world. You would be like a donkey who cries its lust away. Sounds like a total loser to me..

"We can all agree: the incentives are bad."

Seriously?!

If I kill someone, or behave like an asshole, everyone will hate me, so I've got an incentive not to. Is that so horrible?

The reason that people talk about incentives when it comes to politics is that laws and large parts of present day's richer countries economic systems are controlled by laws, contracts, associations between countries, companies, people, etc. and are an artificially created ruleset. That means if you change rules you change incentives. Eg. if you know a government will bail you out, you lose the incentive to avoid risky things, if there is a tax on something you are it will influence your monetary incentives, if being an asshole is looked upon favorably then you have an incentive to be one. Also if tax fraud isn't considered a crime by large parts of people or is seen as smart then you have an incentive to commit it.

A lot of social change good and bad came from shifts in good and bad incentives.

Even more. If you look at the legal and prison systems in Norway vs eg the US the incentives that individuals, governments and corporations have are a reason for a 5 year recidivism rate of 70% vs 20%.

In general if you think your life will be better as a criminal than the alternative then you will be incentivized become one. If you can choose between joining the mafia that might even care for you or barely getting through with day jobs then you are incentivized to do so.

So if a government manages to make sure your life will certainly better, than the incentive to join is a whole lot lower.

If you are shamed vs praised (or otherwise feel supported) for sexism or racism you will have an incentive to go a certain way.

Cults and so on used incentives in a bad way, many parents use incentives in a good way ("if you clean up your room/finish your homework/behave you'll get ice cream later").

The reason people talk about incentives is because they shape whether things are likely to work out. As we've seen big public companies usually will do everything they can get away with and will break laws if the expected profit is higher than the potential fine. That is a wrong and very much changeable incentive.

And it doesn't have to be laws. It can be public opinion. If the marketing is more expensive than just not doing a bad thing in first place then that's an incentive as well.

Incentives are the things that make people do things good and bad. Incentives are the reason people go out of bed and be it just the incentive to ease the pressure on their full bladder. And even there if getting up will cost you great pain you might have a higher incentive there.

Just like people going to doctors is often dominated by incentives of getting rid of a sickness vs not having to pay money or endure a potentially painful or side effect rich treatment.

What's they are missing is that it's all incentives, all the way down. You want to be a good kind person? You feel good when you believe you've demonstrated this - but you're just acting on incentives you've set for yourself to feel good. You want to feel morally superior by quitting social media (thereby avoiding the overt incentives to the contrary) or donating more to charity? Same thing - you're following incentives you've created for yourself to be the person you want to be and be seen as.

--

Also, FWIW, I strongly disliked the mid-article moralisation - implying that people are somehow flawed, inferior individuals if they haven't examined every aspect of their world and developed a deep understanding of it that could never be challenged. This is just a self-serving conceit of someone who feels superior because they think they see the matrix (or fish). The world is full of people who live their lives as best they can, trying to be decent people as best they can, without having the time, energy, or incentive to dive deeper into things as the author seems to believe they should. Are they inferior people? No. So f#ck this author and their snide superior moralistic b#llshit.