incentives are all around us - stlouisfed.org

FEDERAL RESERVE BANK OF ST. LOUIS ECONOMIC EDUCATION

© 2021, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes, provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education. 1

Incentives Are All Around Us

Lesson AuthorAndrea Caceres-Santamaria, Federal Reserve Bank of St. Louis

Standards and Benchmarks (see page 18)

Lesson DescriptionStudents play a game to experience gaining the reward that comes with positive incentives and paying the penalty that comes with negative incentives. Varieties of incentives are intro-duced to discuss types of incentives, what behavior they are trying to encourage or discour-age, and who creates these incentives. After applying their gained knowledge of incentives, students are assessed by creating an incentive following a step-by-step guide and then pre-senting it to the class.

Grade Level9–12

ConceptsBenefits

Choice

Costs

Economic incentives (positive and negative)

ObjectivesStudents will be able to

• distinguish between negative and positive incentives;

• define economic incentives, choice, benefits, and costs;

• identify and explain the particular behavior that an incentive is trying to encourage or dis-courage; and

• identify the costs and benefits of a decision that is made based on the incentive ordisincentive.



Compelling QuestionWhat types of incentives does society create that may change people’s behavior in predictable ways?

Time Required45–60 minutes

Materials • Slides 1–6

• Handout 1: Letter Choice, with enough copies to provide one card for each student. Cut out each card so that it can be folded in half along the middle with the letter A on one side and the letter B on the opposite side.

• Handout 2: Incentives Game Instructions, one copy for each pair of students

• Handout 3: Incentives (Draw Pile), one copy cut apart for each pair of students (each deck contains 12 incentives)

• Handout 4: Response Cards for Player 1, one copy for each pair of students. To differenti-ate the cards for player one and player two, all the sets for player one in each group can be copied on colored paper.

• Handout 5: Response Cards for Player 2, one copy for each pair of students. To differenti-ate the cards for player one and player two, all the sets for player two in each group can be copied on colored paper that is different from the color used for the player one cards.

• Handout 5a: Answer Key to Incentives Game, one copy for the teacher

• Handout 6: Closure, one copy for each pair of students

• Handout 6a: Closure Answer Key, one copy for the teacher

• Handout 7: Assessment, one copy for each pair of students

• Blank paper for each pair of students

• Colored pencils, markers, or crayons for each pair of students

• Enough beans (any type is fine) for each student to have 10 and each pair of students to have 30

• Snack-size plastic zip bags for each student

• One small paper plate for each pair of students



Preparation• 10 beans inside the snack-size plastic bags for each student

• 30 beans on a paper plate for each pair of students

Procedure1. Give each student a letter choice card from Handout 1: Letter Choice.

2. Display Slide 2. Click through each type of incentive and have students hold up their choice cards, either A or B, after you pose each question. As students display their choices, have a few students share why they made that particular choice.

3. Explain that incentives are perceived benefits that encourage certain behaviors. Some incen-tives involve money. Discuss what types of behaviors the following incentives are trying to encourage or discourage:

• Why would parents offer to pay their kids for good grades? (Answers will vary but could include “as an incentive for them to do well in school and do their homework.”)

• What is the incentive to study for a test? (Answers will vary but could include “to earn a good grade,” “to increase an overall grade in a class,” “to avoid decreasing an overall grade in a class,” or “to demonstrate that you understand the content.”)

• What is the incentive for a server to be friendly and attentive to the customer? (Answers will vary but could include “to earn a higher tip,” “to earn a raise,” “to not get fired,” or “to enjoy their job.”)

• What behavior would threatening drivers with a $500 ticket for speeding prevent? (Answers will vary but could include “it might prevent drivers from speeding” or “it could act as an incentive for drivers to drive at the speed limit.”)

4. Explain that these and the incentives in the opening activity cause people to behave in certain ways. In general, people respond to incentives in predictable ways. Thus we can encourage or discourage behaviors through the incentives we offer.

5. Display Slide 3. Positive incentives are rewards that encourage behaviors that make people better off, and there may be a monetary or measurable reward for doing so.

6. Display Slide 4. Negative incentives (disincentives) are penalties that are intended to dis-courage behaviors that make people worse off, and there may be a monetary penalty that must be paid or some other measurable penalty for doing so.



7. Every decision that people make involves weighing the costs (things unfavorable to a decision-maker) and benefits (things favorable to a decisionmaker) of each option. Positive incentives increase the benefits of one alternative relative to the costs. For example, receiving extra points or money for good grades increases the benefits of studying or doing homework. These incen-tives make the option of studying more attractive, which encourages people to choose that option. Negative incentives increase the costs of one option relative to the benefits. For exam-ple, incurring a loss of driving privileges for not being home at the appointed time increases the cost of staying out past curfew. This makes the option less attractive and may discourage people from choosing that option. Therefore, people respond to incentives. Incentives are usually intended to help people behave in a predictable way.

8. Display Slides 5–6. Explain that economic incentives, in particular, involve a financial benefit or cost; therefore they can be either positive or negative. Review the examples of economic incentives.

9. Explain that some incentives are put in place by governments at the local, state, or national level. Tax breaks, speeding tickets, and littering fines are examples of incentives created by the government. Other incentives are created by businesses to encourage consumers to purchase certain goods and services. These incentives include buy-one-get-one-free sales, offering two items for a low price, and other discounts.

10. Explain that schools also have several incentives in place that are positive or negative. Discuss examples of incentives in your school, along with the costs and benefits of each. Some exam-ples mentioned may include

• cell phone policies;

• tardy policies;

• recognition and gifts for good grades and/or good behavior; and

• late work policies.

11. Explain that students will be playing a game with various incentives that students and consumers may face. Some incentives are economic incentives, and some are incentives similar to what they may face in school.

12. Divide students into pairs. Give each pair of students one copy of Handout 2: Incentives Game Instructions, one set of cards from Handout 3: Incentives (Draw Pile), one set from Handout 4: Response Cards for Player 1, and one set from Handout 5: Response Cards for Player 2. Provide a bag of 10 beans for each student and 30 beans on a small plate for each pair of students.

13. Refer students to the directions in Handout 2 and review them as follows:



• Place the cards from the draw pile (Handout 3) in the center between the two players, along with the small plate with 30 beans. Each player should also have 10 beans to start the game.

• The beans represent the penalty or reward for each incentive. The beans provide an expe-rience of gaining and losing, which is what people have to consider when responding to incentives. In real life, money and other non-monetary incentives are used in place of beans, as is the case in the examples discussed previously.

• Each player should have one deck of cards (Handouts 4 and 5).

• Begin the game by having the younger of the two players draw a card from the center pile. The player reads the card aloud. Both players look at their cards and see which response to the incentive matches the one read from the draw pile. For example, if the card reads “Get caught speeding, and you get one expensive ticket,” the players will search for the response card that indicates whether they got caught speeding or not. The players should read their response cards aloud.

• Follow the instructions on the card. If you are rewarded, take the indicated amount of beans from the center; if you are penalized, you add the indicated amount to the center, taking away from your beans.

• Take turns drawing cards from the center pile and reading the incentives aloud until every card has been drawn.

• The player with the most beans when all the incentives cards have been drawn wins the game!

14. Allow students time to play the game. Circle around the room to each group to ensure that the game is being played correctly.

15. Debrief the game by discussing the following:

• What are some examples of positive incentives in the game? (Discount on insurance for good grades, paycheck for working)

• What are some examples of negative incentives in the game? (Losing points for turning an assignment in late, fines for late library books, fines for littering)

• What did losing beans or having to pay an amount of beans represent in the game? (Losing or paying beans represented the cost of being penalized—for example, if you were caught speeding or not bringing your own shopping bag to the store.)

• How were the beans used to represent a positive incentive or reward? (Earning beans was the reward—for example, going to work and getting paid, doing your homework, or following the speed limit.)

• In general, do you think incentives work? (Answers will vary, but students should see that, in general, incentives work to encourage or discourage behaviors.)



• Name a positive incentive that your parents use to encourage you to keep your room clean or do other work at home. (Answers will vary but may include “not getting in trou-ble,” “having more time to do the things you like,” or “getting an allowance.”)

• Name a negative incentive that your parents use to discourage you from skipping class or not being home on time. (Answers will vary but may include “getting grounded,” “having less time on electronics,” or “having items taken away for a period of time.”)

Closure16. Give a copy of Handout 6: Closure to each pair of students. Review the instructions for the

activity. Allow students a few minutes to work together to complete the activity. Once students have completed the activity, review the answers. Refer to the teacher key Handout 6a: Closure Answer Key.

• Optional: Project the handout under a document camera and choose one student at a time to come up and fill in the table as the other students provide responses.

Assessment17. Have students work in the same groups as they did for the game. Distribute a copy of

Handout 7: Assessment; crayons, markers, or colored pencils; and a blank sheet of paper. Review the instructions for the assessment with the class. Allow time for the students to work and then have students present their group-created incentive.



Handout 1: Letter Choice

A BA B



Handout 2: Incentives Game Instructions

• Place the cards from the draw pile (Handout 3: Incentives) in the center between the two players, along with the small plate with the 30 beans. Each player should also have 10 beans to start the game.

• The beans represent the penalty or reward for each incentive. The beans provide an experience of gaining and losing, which is what people have to consider when responding to incentives. In real life, money and other non-monetary incentives are used in place of beans, as is the case in the examples discussed previously.

• Each player should have one deck of cards (Handout 4: Response Cards for Player 1 and Handout 5: Response Cards for Player 2).

• Begin the game by having the younger of the two players draw a card from the center pile. The player reads the card aloud. Both players look at their cards and see which response to the incentive matches the one read from the draw pile. For example, if the card reads “Get caught speeding, and you get one expensive ticket,” the players will search for the response card that indicates whether they got caught speeding or not. The players should read their response cards aloud.

• Follow the instructions on the card. If you are rewarded, take the indicated amount of beans from the center; if you are penalized, you add the indicated amount to the center, taking away from your beans.

• Take turns drawing cards from the center pile and reading the incentives aloud until every card has been drawn.

• The player with the most beans when all the incentives cards have been drawn wins the game!



Handout 3: Incentives (Draw Pile)

Go

od

stu

den

t d

isco

un

t!

Year

ly s

avin

gs

o

n c

ar in

sura

nce

fo

r g

oo

d g

rad

es

(B o

r ab

ove

)

Get

cau

gh

t sp

eed

ing

an

d

you

get

on

e ex

pen

sive

tic

ket.

50-p

oin

t p

enal

ty

for

turn

ing

h

om

ewo

rk in

late

Payc

hec

k fo

r w

ork

ing

at

the

Ho

t D

og

Hav

en

Ho

no

r R

oll

B

uff

ett

Lun

ch

Payi

ng

th

e w

ater

b

ill p

ast

the

du

e d

ate

will

co

st

you

a la

te f

ee.

A f

ull

rid

e to

a

2-ye

ar c

olle

ge

fo

r g

rad

uat

ing

w

ith

a 3

.5 o

r ab

ove

GPA

Get

cau

gh

t lit

teri

ng

an

d

you

get

on

e ex

pen

sive

tic

ket.

Dis

cou

nt

on

h

ealt

h in

sura

nce

if

yo

u g

o f

or

an

ann

ual

ch

ecku

p

The

gro

cery

sto

re

char

ges

fo

r ea

ch

pla

stic

bag

—u

nle

ss y

ou

b

rin

g y

ou

r o

wn

.

Lib

rary

bo

oks

sh

ou

ld a

lway

s b

e re

turn

ed o

n t

ime.

Ev

ery

wee

k th

e b

oo

k is

late

mea

ns

you

are

fin

ed.

If y

ou e

arn

a pa

ssin

g sc

ore

on a

co

llege

-leve

l exa

m,

the

scho

ol w

ill

wai

ve t

he e

xam

fe

e. If

you

do

not

pass

, you

will

ow

e th

e sc

hool

the

ex

am f

ee.



Handout 4: Response Cards for Player 1

You

gra

du

ated

w

ith

a 3

.2 G

PA.

No

fu

ll ri

de

to

a 2

-yea

r

colle

ge

for

you

! Lo

se 6

bea

ns.

You

ear

ned

a D

in

ch

emis

try

and

ar

t. Y

ou

lose

th

e g

oo

d s

tud

ent

dis

cou

nt.

Pa

y 4

bea

ns.

No

sp

eed

ing

ti

cket

fo

r yo

u—

you

dri

ve t

he

spee

d li

mit

!

Earn

5 b

ean

s

as a

rew

ard

.

You

fo

rgo

t

to s

ched

ule

yo

ur

ann

ual

ph

ysic

al.

The

hea

lth

in

sura

nce

co

mp

any

incr

ease

s yo

ur

insu

ran

ce

cost

s. Y

ou

pay

10

bea

ns.

Ho

mew

ork

is a

p

rio

rity

fo

r yo

u!

You

alw

ays

turn

it

in o

n t

ime.

Yo

u g

et 2

bea

ns

as

a r

ewar

d.

You

love

to

bu

y fr

oze

n v

egg

ies,

b

ut

you

fo

rgo

t yo

ur

reu

sab

le

gro

cery

bag

. Yo

u p

ay 2

bea

ns

for

the

3 b

ags

yo

u h

ad t

o u

se.

You

stu

die

d

very

har

d f

or

a co

lleg

e-le

vel e

xam

an

d p

asse

d!

Yo

u e

arn

4 b

ean

s.

Ho

no

r R

oll

B

uff

et L

un

ch

her

e yo

u c

om

e!

You

go

t so

me

tuto

rin

g a

nd

yo

ur

gra

des

wen

t u

p!

Get

2 b

ean

s.

You

wo

rked

th

is

wee

k, a

nd

th

at

pay

chec

k su

re

is s

wee

t!

Earn

10

bea

ns.

Uh

oh

. Yo

u p

aid

th

e w

ater

bill

5

day

s af

ter

it

was

du

e.

Pay

up

8 b

ean

s

as t

he

pen

alty

.

You

are

cau

gh

t th

row

ing

a f

ast-

foo

d w

rap

per

on

th

e g

rou

nd

. An

o

ffice

r fi

nes

yo

u!

Pay

a 5-

bea

n fi

ne

for

litte

rin

g.

Ret

urn

ing

lib

rary

b

oo

ks o

n t

ime

is

wh

at y

ou

are

al

l ab

ou

t.

Get

2 b

ean

s.



Handout 5: Response Cards for Player 2

You

stu

dy

har

d

in h

igh

sch

oo

l an

d g

rad

uat

e

wit

h a

3.7

GPA

. G

et 6

bea

ns.

You

ear

ned

an

A

in c

hem

istr

y an

d

art.

Yo

u k

eep

th

e g

oo

d s

tud

ent

dis

cou

nt.

Ea

rn 4

bea

ns.

Wh

o s

aid

go

ing

20

mile

s o

ver

th

e sp

eed

lim

it

is s

afe?

Yo

u g

et

cau

gh

t an

d

tick

eted

fo

r sp

eed

ing

!

Pay

up

5 b

ean

s.

You

sch

edu

led

yo

ur

ann

ual

p

hys

ical

. Th

e h

ealt

h in

sura

nce

co

mp

any

gra

nts

yo

u a

n a

nn

ual

d

isco

un

t. Y

ou

ea

rn 1

0 b

ean

s.

Wh

o h

as t

ime

fo

r h

om

ewo

rk?

No

t yo

u;

you

r p

rog

ress

re

po

rt s

ho

ws

a

50-p

oin

t p

enal

ty.

You

lose

2 b

ean

s.

You

love

to

bu

y fr

oze

n v

egg

ies

and

rem

emb

ered

to

bri

ng

yo

ur

insu

late

d r

eusa

ble

b

ag. Y

ou

ear

n

2 b

ean

s.

Un

fort

un

atel

y,

you

did

no

t

do

wel

l on

th

e co

lleg

e-le

vel e

xam

. Pa

y u

p 4

bea

ns.

Ho

no

r R

oll

B

uff

et L

un

ch

her

e yo

u c

om

e!

You

go

t so

me

tuto

rin

g a

nd

yo

ur

gra

des

wen

t u

p!

Get

2 b

ean

s.

You

wo

rked

th

is

wee

k, a

nd

th

at

pay

chec

k su

re is

sw

eet!

Bu

t yo

u

dec

ided

to

ca

ll in

on

e d

ay

pre

ten

din

g t

o b

e si

ck. Y

ou

co

uld

h

ave

earn

ed m

ore

. Ea

rn 8

bea

ns.

You

pai

d

the

wat

er b

ill

on

tim

e!

Get

8 b

ean

s.

You

are

alw

ays

sure

to

th

row

yo

ur

tras

h a

way

p

rop

erly

. No

lit

teri

ng

fin

e fo

r yo

u!

Get

5 b

ean

s.

Ther

e’s

that

lib

rary

b

oo

k th

at w

as d

ue

two

mo

nth

s ag

o!

Pay

the

fin

e o

f 2

bea

ns.



Handout 5a: Answer Key to Incentives Game (page 1 of 2)

Handout 3: Incentives Handout 4: Response Cards Handout 5: Response Cards

Good student discount! Yearly savings on car insurance for good grades (B or above)

You graduated with a 3.2 GPA. No full ride to a 2-year

college for you! Lose 6 beans.

You study hard in high school and graduate with a 3.7 GPA.

Get 6 beans.

Get caught speeding and you get one expensive ticket.

You earned a D in chemistry and art. You lose the good

student discount. Pay 4 beans.

You earned an A in chemistry and art. You keep the good

student discount. Earn 4 beans.

50-point penalty for turning homework in late

No speeding ticket for you—you drive the speed limit! Earn

5 beans as a reward.

Who said going 20 miles over the speed limit is safe? You get caught and ticketed for speeding! Pay up 5 beans.

Paycheck for working at the Hot Dog Haven

You forgot to schedule your annual physical. The health

insurance company increases your insurance costs. You pay

10 beans.

You scheduled your annual physical. The health insurance

company grants you an annual discount. You earn 10

beans.

Honor Roll Buffett Lunch

Homework is a priority for you! You always turn it in on time. You get 2 beans as a

reward.

Who has time for homework? Not you’re your progress

report shows 50-point penalty. You lose 2 beans.

Paying the water past the due date will cost you a late fee.

You love to buy frozen veggies, but you forgot your

reusable grocery bag. You pay 2 beans for the 3 bags you

had to use.

You love to buy frozen veggies and remembered to bring

your insulated reusable bag. You earn 2 beans.

A full ride to a 2-year college for graduating with a 3.5 or

above GPA

You studied very hard for a college-level exam and

passed! You earn 4 beans.

Unfortunately, you did not do well on the college-level exam. Pay up 4 beans.

Get caught littering and you get one expensive ticket.

Honor Roll Buffet Lunch here you come! You got some

tutoring and your grades went up! Get 2 beans.

Honor Roll Buffet Lunch here you come! You got some

tutoring and your grades went up! Get 2 beans.



Handout 3: Incentives Handout 4: Response Cards Handout 5: Response Cards

Discount on health insurance if you go for an annual

checkup

You worked this week, and that paycheck sure is sweet!

Earn 10 beans.

You worked this week, and that paycheck sure is sweet!

But you decided to call in one day pretending to be sick. You could have earned more. Earn

8 beans.

The grocery store charges for each plastic bag—unless you

bring your own.

Uh oh. You paid the water bill 5 days after it was due. Pay up

8 beans as the penalty.

You paid the water bill on time! Get 8 beans.

Library books should always be returned on time. Every

week the book is late means you are fined.

You are caught throwing a fast food wrapper on the

ground. An officer fines you! Pay a 5 bean fine for littering.

You are always sure to throw your trash away properly. No littering fine for you! Get 5

beans.

If you earn a passing score on a college-level exam, the school will waive the exam fee. If you do not pass, you will owe the

school the exam fee.

Returning library books on time is what you are all about.

Get 2 beans.

There’s that library book that was due two months ago! Pay

the fine of 2 beans.

Handout 5a: Answer Key to Incentives Game (page 2 of 2)



Handout 6: Closure In

cen

tive

Posi

tive

or

neg

ativ

e?

Wha

t ty

pe o

f be

havi

or is

the

in

cent

ive

tryi

ng t

o

enco

urag

e or

di

scou

rage

?

Who

wou

ld c

reat

e an

in

cent

ive

like

this

? Th

e go

vern

men

t, a

busi

ness

, or a

sch

ool?

Eco

no

mic

ince

nti

ve?

Ind

icat

e (Y

) fo

r ye

s an

d (

N)

for

no

.

Goo

d st

uden

t di

scou

nt!

Year

ly s

avin

gs o

n ca

r in

sura

nce

for

good

gr

ades

(B o

r ab

ove)

Get

cau

ght

spee

ding

an

d yo

u ge

t on

e ex

pens

ive

ticke

t.

50-p

oint

pen

alty

for

tu

rnin

g ho

mew

ork

in

late

Payc

heck

for

wor

king

at

the

Hot

Dog

Hav

en

Hon

or R

oll B

uffe

tt

Lunc

h

The

groc

ery

stor

e ch

arge

s fo

r ea

ch p

last

ic

bag—

unle

ss y

ou b

ring

your

ow

n.

A f

ull r

ide

to a

2-y

ear

colle

ge f

or g

radu

atin

g w

ith a

3.5

or

abov

e G

PA



Handout 6a: Closure Answer KeyIn

cen

tive

Posi

tive

or

neg

ativ

e?

Wha

t ty

pe o

f be

havi

or is

the

in

cent

ive

tryi

ng t

o

enco

urag

e or

di

scou

rage

?

Who

wou

ld c

reat

e an

in

cent

ive

like

this

? Th

e go

vern

men

t, a

busi

ness

, or a

sch

ool?

Eco

no

mic

ince

nti

ve?

Ind

icat

e (Y

) fo

r ye

s an

d (

N)

for

no

.

Goo

d st

uden

t di

scou

nt!

Year

ly s

avin

gs o

n ca

r in

sura

nce

for

good

gr

ades

(B o

r ab

ove)

Posi

tive

Enco

urag

ing

stud

ents

w

ho d

rive

to d

o w

ell

in s

choo

l. A

s an

in

cent

ive,

the

y sa

ve o

n ca

r in

sura

nce.

A b

usin

ess,

per

haps

in

colla

bora

tion

with

sc

hool

s

Yes,

bec

ause

the

re is

a

finan

cial

ince

ntiv

e

Get

cau

ght

spee

ding

an

d yo

u ge

t on

e ex

pens

ive

ticke

t.N

egat

ive

Dis

cour

agin

g pe

ople

fr

om s

peed

ing

by

asso

ciat

ing

it w

ith a

hi

gh c

ost.

Loca

l gov

ernm

ents

in

a ci

ty w

ould

get

to

geth

er w

ith t

he

loca

l pol

ice

offic

e to

cr

eate

it.

Yes,

bec

ause

the

re is

a

finan

cial

cos

t in

volv

ed

50-p

oint

pen

alty

for

tu

rnin

g ho

mew

ork

in

late

Neg

ativ

eIt

is a

dis

ince

ntiv

e fo

r tu

rnin

g ho

mew

ork

in

late

. Sc

hool

s N

o, t

here

is n

o fin

anci

al b

enefi

t or

co

st

Payc

heck

for

wor

king

at

the

Hot

Dog

Hav

enPo

sitiv

e

Enco

urag

ing

peop

le

to g

o to

wor

k by

of

ferin

g th

em t

he

ince

ntiv

e of

ear

ning

m

oney

.

Busi

ness

es p

ay p

eopl

e fo

r th

eir

wor

k.Ye

s, b

ecau

se t

here

is a

fin

anci

al in

cent

ive

Hon

or R

oll B

uffe

tt

Lunc

hPo

sitiv

eEn

cour

agin

g st

uden

ts

to g

et g

ood

grad

esSc

hool

s

No,

the

re is

no

imm

edia

te fi

nanc

ial

bene

fit o

r co

st t

o th

e st

uden

t

The

groc

ery

stor

e ch

arge

s fo

r ea

ch p

last

ic

bag—

unle

ss y

ou b

ring

your

ow

n.

Neg

ativ

e

Enco

urag

ing

cust

omer

s to

brin

g th

eir

own

reus

able

ba

gs a

nd s

ave

on

was

te

Busi

ness

es a

nd, i

n so

me

plac

es,

gove

rnm

ents

Yes,

bec

ause

the

re is

a

finan

cial

cos

t

A f

ull r

ide

to a

2-y

ear

colle

ge f

or g

radu

atin

g w

ith a

3.5

or

abov

e G

PAPo

sitiv

e

Enco

urag

ing

stud

ents

to

do

wel

l dur

ing

thei

r 4

year

s of

hig

h sc

hool

an

d ea

rn a

sch

olar

ship

Typi

cally

sch

ools

alo

ng

with

gov

ernm

ents

, su

ch a

s th

e st

ate’

s D

epar

tmen

t of

Ed

ucat

ion.

Yes,

the

re is

a fi

nanc

ial

bene

fit o

f sa

ving

s on

co

llege

cos

ts



Handout 7: Assessment (page 1 of 2)

Working with the same partner as you did when you played the game, you will create a positive or negative incentive. Think of a behavior within your school or society in general that the group believes could be persuaded to change through some type of incentive. Use this sheet to create your incentive or disincentive. Follow the directions in each step carefully.

Step 1: Discuss as a group what behavior you would like to possibly change. Fill in the spaces below with three ideas that your group comes up with, and then circle your final decision.

• ______________________________________________________________________________

• ______________________________________________________________________________

• ______________________________________________________________________________

Step 2: Discuss and write down at least three different incentives (positive or negative) that could result in the predicted behavior. Make sure that the reward or penalty is explained or defined clearly. Indicate whether the incentive is monetary or non-monetary. Circle the final choice the group decided on.

• ______________________________________________________________________________

• ______________________________________________________________________________

• ______________________________________________________________________________

Step 3: Explain why the incentive is positive or negative.

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

Step 4: Every incentive involves making a choice between some options. Explain these options here.

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________



Handout 7: Assessment (page 2 of 2)

Step 5: On a blank sheet of paper. Come up with an illustration that explains your incentive. The illustration should clearly show what the incentive is, and if there is a reward or penalty. You will share your incentive with the class.



Standards and Benchmarks

Voluntary National Content Standards in Economics

Content Standard 1: Scarcity

• Benchmark: Grade 8

3. The choices people make have both present and future consequences.


1. Choices made by individuals, firms, or government officials are constrained by the resources to which they have access.

Content Standard 4: Incentives


1. Responses to incentives are usually predictable because people normally pursue their self- interest or deviate from their self-interest in consistent ways.

2. Changes in incentives usually cause people to change their behavior in predictable ways.

3. Incentives can be monetary or non-monetary, or both.

• Benchmark Grade 12

1. Acting as consumers, producers, workers, savers, investors, and citizens, people respond to incentives in order to allocate their scarce resources in ways that provide them the highest possible net benefits.

incentives are all around us - stlouisfed.org

Documents