Incentives

Call for papers: "Prizes and Virtues: An Interdisciplinary Workshop" (Rome, April 10-11, 2017)

“PRIZES AND VIRTUES: AN INTERDISCIPLINARY WORKSHOP”
LUMSA University, Rome – April 10-11, 2017

To an economist, a prize, such as a golden medal, is merely a special type of incentive. Any other kind of social scientist would be perplexed by thinking of the Nobel Prize, or of the Medal of Honour, in these terms. In contemporary neoclassical economics, the concept of incentive is a primitive, similar to that of “utility”, “price”, “production” or “consumption”, that all economists use but none feels the need to define: it is a foundation, or a corner stone, of the science of economics. However, if we tried to articulate what economists mean by incentives, we would probably find that they are considered as any “motivation” for adhering to and for complying with some form of contract. Once incentives are intended in this all-embracing way, it immediately follows that prizes and awards are considered simply as their sub-set. Yet many real world prizes and awards do not follow this contractarian, consequentialist logic and cannot be understood within this framework. A more complex understanding of human motivation–we believeis needed to hold that prizes are indeed not incentives.

This search cannot ignore the history of economic and philosophical ideals. Competing theories of action and motivation were central topics of debate among eighteenth century philosophers. David Hume, Jean-Jacques Rousseau, and Adam Smith’s theories implied much more complex social and economic motivations than mere self-interest, which can be opportunely diverted through an appropriate incentive. Within the Italian school of civil economy, Pietro Verri and Antonio Genovesi elaborated on the unintended consequences of public and institutional actions on individuals’ behaviour. In the same line, Giacinto Dragonetti debated (at a distance) with Cesare Beccaria on the nature and effectiveness of punishments and awards in shaping agents’ choices, both in private and public contexts. From the mid XIX century onward, economists became those social scientists most characterized by the purest anthropology (i.e. that of a human being acting in order to maximize individual utili!
 ty), endorsing utilitarian philosophy and sacrificing previously complex understanding of human actions. In the XX century, microeconomics has continued this process of anthropological reductionism: management theory, as well as agency and contract theory, have distilled the all-embracing theory of incentives.

In the last three decades, behavioural and experimental economics are undermining from within this reductionist model of human behaviour. By taking serious account of concepts such as reciprocity, intrinsic motivation, inequality aversion, and fairness, they are making more complex interpretations of human action and motivation central again, albeit still within the utilitarian framework. In addition, there is an important contemporary philosophical stream of inquiry, the so-called virtue ethics, which competes with utilitarianism yet remains almost unknown to the economic profession. We argue that this research may provide further insights into human action, which seem otherwise intractable within the current anthropological framework, and can cast a new light on the nature and working of prizes as fundamentally different from incentives. In particular, prizes may well suit the rewarding of virtues, because incentive are known to be liable to cause motivation crowding-out.

To advance our understanding of the economics of prizes, awards and their link with virtues,we warmly invite economists, historians, philosophers, scholars in organization and management and other social scientists to answer to this call and submit an extended abstract (max 1000 words).

Keynote speakers:
– Robert Dur, Erasmus University Rotterdam (Economics)
– Bruno Frey, University of Basel (Behavioural Science)
– Ruth Grant, Duke University (Political Science)

“Pier Luigi Porta” Award:
Heirs will honour the memory of the past Heirs’ President Professor Pier Luigi Porta by a special award to the best paper presented at this conference, a stream of research strongly supported by him before dying. Heirs invites all under fourty scholars to apply for this special “Pier Luigi Porta Award”. The award consist in 2500 euro plus travel cost and accomodation for the conference. The prize will be assigned during the social dinner.

Deadline for submissions of extended abstracts (max 1000 words):
February 15th, 2017 (acceptance date: February 25th, 2017)
to: heirs.unimib@gmail.com

Organization committee: HEIRS & LUMSA University
Luigino Bruni (LUMSA), Vittorio Pelligra (U. Cagliari), Tommaso Reggiani (LUMSA),     Matteo Rizzolli (LUMSA), Alessandra Smerilli (LUMSA).

Contacts:
heirs.unimib@gmail.com


The Shepherd and the Hired Hand

Jonathan B. Wight

The Bible contains lots of economic directives and insights. Some of it is quite interesting for maintaining social order and some of it quite objectionable in light of 21st century moral norms (e.g., the tacit endorsement of slavery and polygamy).

Part of my passion for justice in markets was aroused as a teenager by reading the accounts of Jesus in the book of Matthew. I guess (but have no evidence) that some of this also rubbed off on Adam Smith, who initially trained for the clergy. Smith thought hard about justice for the poor, and it was almost always the focus of his interest (on average he returns to the word justice about once every other page in TMS and once every 7 pages in WN).

My initial Jesus-inspired inclination was definitely toward socialism, and many Christians in Latin America followed Liberation Theology which seemed almost communistic. It was not until graduate school, however, when I had returned to Brazil to gather data for my dissertation, that the deeper meanings of justice through policy came to be appreciated. The Brazilian government's wholesale manipulation of prices and incentives seemed politically motivated to help elites, and even when done to supposedly help the poor, was often ineffective. That opened my eyes to the deeper virtues in markets—if, as Smith noted, the correct pre-conditions existed.

Not all Bible passages lean socialistic. Here's one passage (of many) on the meaning of ownership and incentives (the principal-agent problem):

The hired hand is not the shepherd and does not own the sheep. So when he sees the wolf coming, he abandons the sheep and runs away. Then the wolf attacks the flock and scatters it. 13 The man runs away because he is a hired hand and cares nothing for the sheep.

    --John 10:12