You Get What You Reward!

You get what you reward!

That is the most fundamental truism, not not for mankind but for all of the animal kingdom.  If you reward a behavior, you get more of it.  If you punish a behavior, you get less of it.

For example, the Affordable Care Act specified that employers with 50 or greater employees must give full healthcare benefits to employees working 30 or more hours each week.  The Bureau of Labor Statistics reported that prior to 2013, six full-time jobs were created for each part-time job.  In 2013 (article from August 2013) only one new full-time job was being created for every four part-time jobs.  In a Chamber of Commerce poll 24% of small businesses will reduce hiring to stay under 50 employees. ( http://www.forbes.com/sites/gracemarieturner/2013/08/27/its-fact-not-anecdote-that-obamacare-is-turning-us-into-a-part-time-nation/)

Basically, the Affordable Care Act punishes hiring full-time workers at a time of high unemployment.

You get what you reward!

The Affordable Care Act also states that the most expensive plan can cost no more than three times the cost of the least expensive plan.  This effectively forces the rates to be much higher for young, healthy people.  It also requires these people to buy comprehensive policies when they might just wish to purchase a bare-bones policy at a lower cost.  At the same time, insurance companies are no longer allowed to deny coverage for pre-existing conditions.  People can wait till they get sick and then get insurance if they need it.  Young people have the choice of buying costly healthcare insurance or saving the money and buying it later if needed.  We are rewarding people for not buying health insurance.

Large financial companies can make highly risky trades and get the profit if they succeed and go to the taxpayers for a bail out if they fail.

You get what you reward!

Whenever a policy is proposed, the primary question is usually who does it help and who does it hurt.  That is the wrong question.  

The first question we should always ask is if the policy rewards good choices or bad choices.

2 thoughts on “You Get What You Reward!

  1. Rewards usually lead to more of the behavior which is being rewarded. However, it is a well-established fact of psychological theory that for different reasons adverse stimuli does not always eradicate negative behaviors.

  2. I am not claiming that changing the reward/punishment ratio will always change behavior or anything close to that. I am claiming that it will sometimes and the sometimes can thwart the policy. For example, lets say I am president of an organization that has 100 members each paying $100 in dues so we collect $10,000. I determine that for the next year we need $11,000 so I raise the dues to $110/person. As a result 90 of the members pay the dues but 10 object to the increase and leave the organization. Now we are collecting $9,900 so my increase in dues has caused a decrease in revenue, even though only 10% of the people changed their behavior due to my actions.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s