The Economy Around You — Why people respond to rewards and penalties.
Much of economics comes down to incentives: the rewards and penalties that motivate people to act a certain way.
Bulk discounts, loyalty points, and free shipping thresholds all nudge you to spend more. Taxes on cigarettes nudge people to smoke less.
Perverse incentive: An incentive that produces the opposite of what was intended, like a reward that accidentally encourages harmful behavior.
Asking 'who benefits from this' reveals the incentives behind a sales pitch, recommendation, or policy, helping you judge it critically.
12 practice questions with explanations. Free, and no account is needed to start.