Chapter 1 Summary

In Chapter 1, Freakonomics demonstrates how incentives affect human behavior. As the book explains, economics is the study of incentives, which are ways to get people to do good rather than bad things. There are three different types of incentives - economic, social and moral. The book states that economists love to manipulate incentives to try to affect human behavior, but sometimes an incentive will have unintended consequences. As an example, the authors first cite a study of daycare centers in Haifa, Israel, in which a $3 fine is assessed to parents who pick their children up late from the centers. After the fine is introduced, the number of late pick-ups immediately goes up. The researchers find that the $3 fine turns out to be a poor incentive for parents to pick their children up on time because the fine is too low. Furthermore, the fine...