Freakonomics Chapter 1 Summary

In Chapter One of Freakonomics, “What Do Schoolteachers and Sumo Wrestlers Have in Common,” the authors accentuate the argument that there are three types of incentives and that these incentives impel people to act a certain way. As Steven D. Levitt and Stephen J. Dubner explain, “An incentive is simply a means of urging people to do more of a good thing and less of a bad thing.” The authors later explain the differing incentives, stating that economic incentives are those in which a person responds to financially, social incentives motivate a person to act a certain way because he cares about what people think about him, and moral incentives appeal to a person’s sense of right or wrong (aka ethos). Each of these incentives are best developed though the authors’ examples of Chicago public school teachers, Japanese sumo wrestlers, and Paul Feldman’s bagel
For example, the Chicago school system provided strong negative and positive economic incentives for teachers to work harder. The text states, “If the entire school does poorly, federal funding can be withheld…the state of California at one point introduced bonuses of $25,000 for teachers who produced big test-score gains.” Additionally, Japanese sumo wrestling is synonymous with national pride: “In Japan, sumo wrestling is not only the national sport but also a repository of the country’s religious, military, and emotion.” Thus, it is no surprise that sumo wrestlers would be towards the apex of Japanese hierarchy. This popular reverence is a strong incentive for one to practice sumo wrestling, yet we see that within this sport there is much cheating and corruption. Lastly, Paul Feldman’s bagel business provides a brilliant moral incentive experiment. Feldman provided companies with bagels where employees were encouraged, not required, to pay for the