Incentives…
determine outcomes.
Former New York Governor Eliot Spitzer, in Slate
epiphoneme (eh-PIH-fo-neem), the memorable summary. From the Greek epiphonema, meaning “proclaim upon.”
;)
Want to predict how a business or institution will behave? Follow the incentives. Former New York Governor Eliot Spitzer claims that incentives caused the BP oil spill and the financial meltdown; in each case, government assumed the risks while removing regulatory oversight and limiting legal liability. So, following the path of least resistance to profit, the guilty companies took chances that would have seemed insane 20 years ago.
This is complicated stuff, and it demands a simple summary. Spitzer provides one—sort of—in the form of an epiphoneme, a snappy sum-up that can stand on its own. Charles Darwin provided one of the greatest epiphonemes of all time here. Alas, Spitzer proved he is no Darwin by writing, “Incentives matter. In fact, they determine outcomes.”
Figaro stepped in where Slate’s editors feared to tread. If they had pushed the man just a little, Slate might even have produced an epiphoneme they could call Spitzer’s Law: Incentives determine behavior.
But then, some people may have wondered just what incentivized Spitzer to pay $15,000 for certain, um, outcomes.