Time for another edition of “What You Need to Know about Basic Economics.” Today we examine incentives. Incentives are what get people to work harder. Incentives are the motive behind what people do.  People respond to rewards. While preferences are your needs, wants, and desires. Economic incentives provide the motivation to pursue your preferences. Think about why you and the people around you take certain decisions. A mechanic fixes your car not because you need it for transportation, but because you pay him or her to do the repairs. A waiter does not serve you lunch just because you are hungry but because you will pay for the lunch, and if the waiter provides good service, you might become a repeat customer. Incentives can be classified according to the different ways in which they motivate people to take a particular course of action. Remunerative incentives, or financial incentives exist when someone expects material reward – especially money – in exchange for specific goods or services. There are also moral incentives, where someone is motivated to “do the right thing”; the reward is not monetary but rather a sense of approval or improved self-esteem. There are also natural incentives such as the pursuit of truth, or curiosity, or discovery, or mental and physical exercise because it just makes you feel better. And then there are coercive incentives, sometimes called disincentives – where failure to act or failure to act a certain way can result in some form of punishment. An easy ...