Ten Key Elements of Economics

The Insider
Spring 2005

By James Gwartney, Richard L. Stroup, and Dwight R. Lee

1. INCENTIVES MATTER.

All of economics rests on one simple principle: that incentives matter. Altering incentive, the costs and benefits of making specific decisions, alters people’s behavior

Understanding incentives is an extremely powerful tool for understanding why people do the things they do because the impact of incentives can be seen on almost every level, from simple family decision making to securities and international trade.

FOR THE COMPLETE ARTICLE SEE THIS PDF

This essay was published as part of the Heritage Foundation’s Insider

Related Content

Happy (Late) Birthday, Aldo!

We are still far from harmony with the land. But today, less than a week after Leopold’s 133rd birthday, we can be sure he’d be proud of our progress.