When the captains were paid for every prisoner that they took on board, they had little incentive to treat the prisoners well. In fact, the incentives were to treat the prisoners badly. Instead of feeding the prisoners, for example, some of the captains hoarded the prisoners’ food, selling it in Australia for a tidy profit.

When the captains were paid for prisoners who survived the journey, however, their incentives changed. Whereas before, the captains had benefited from a prisoner’s death, now the incentive system “secured to every poor man who died at least one sincere mourner.”3 The sincere mourner? The captain, who was at least sincere about mourning the money he would have earned had the poor man survived.

Incentives are everywhere. In the United States, we take it for granted that when we go to the supermarket, the shelves will be stocked with kiwi fruit from New Zealand, rice from India, and wine from Chile. Every day we rely on the work of millions of other people to provide us with food, clothing, and shelter. Why do so many people work for our benefit? In his 1776 classic, The Wealth of Nations, Adam Smith explained:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

Do economists think that everyone is self-interested all the time? Of course not. We love our spouses and children just like everyone else! But economists do think that people respond in predictable ways to incentives of all kinds. Fame, power, reputation, sex, and love are all important incentives. Economists even think that benevolence responds to incentives. It’s not surprising to an economist, for example, that charities publicize the names of their donors. Some people do give anonymously, but how many buildings on your campus are named Anonymous Hall?