The book is interesting to read because it brings out relatable issues in society. Gneezy and List (2014) argued that in the past years, the field of economics was typically dominated by theories such as economic theory. Economists tend to apply their assumptions to the human world and develop abstract models to forecast new economic events. The authors saw the need to step in and demonstrate control experiments in the scientific laboratory. They manipulate the natural environment to understand how people respond to economic events. For instance, the authors have shifted more attention to understanding society's usual phenomenon, such as how monetary incentives can enhance grades and graduation rates. Gneezy and List (2014) incorporate multiple longitudinal studies to explain education, discrimination, and charitable giving. Controlled experiments have helped many people, especially economists, determine new economic trends and explain multiple phenomena on why men earn more than women.
In Chapter 1, Gneezy and List narrate how incentives influence people's behaviors. They argued that many people think that monetary incentives will alter people's behaviors positively. For instance, they used the example of Rebecca, the owner of the daycare center. She decided to demand from parents $3 when they pick kids 10 minutes late. The number of parents who came late increases, and original aspects lost its meaning. The central concept here is that incentives do not work at all times and do not result in better performance. What works in such a situation is that a person should find what motivates someone, understand someone's value, and then predictably apply incentives.
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In chapter 2, they carry out a controversial study in society: the gender wage gap. Men earn more than women, and the authors associate this difference with competitive culture. They found that women prefer less competitive and engaging jobs, while men the opposite. This aspect demonstrates the reason why there are more male CEOs than their counterparts. The main reason why there is a wide gender wage gap is due to culture. Since birth, women were taught to submissive roles while men were taught to be aggressive, which is the main reason for their competitive nature. For instance, Liz lost the job as head of creativity despite all her qualifications to a competitive but less qualified man.
Besides the wide gender wage gap, In Chapter 3, Gneezy and List (2014) found that women can be competitive or even better than men with the right interventions in place. They can also have more substantial economic impacts on the community. For instance, when society becomes consensual and public-spirited, women can start negotiating from wage prices and stand at the same level as their counterparts. Gender bias, as narrated by the authors, manifests itself at an early age. The takeaway concept is that parents and teachers should raise awareness by teaching girls to be competitive. The skills gained will assist them in the job market.
Gneezy and List (2014) take the book in a different direction in chapter 4 by elaborating on society's imminent issue. They utilize evidence from multiple field experiments to find strategies to decrease the infamous achievement gap in public schools. The author used controlled experiments from high-income families and people living in inner cities. They found out that the United States spends high per capita GDP per student, about $11 447, and there is a 9% dropout rate for students from low-income families and a dropout rate of more than 50% for inner-city learners compared to less than 2% rate from high-income families. Early intervention measure is essential to reduce the achievement gap. Students will learn the importance of education because incentives are not working unless someone understands people's motivations.
Chapter 5 talks about social inequities and how to bridge the gap between poor kids and rich kids, from their most field experiments and visiting frightening neighborhoods to look for needy students. Gneezy and List (2014) found that people from such neighborhoods do not understand the basic English language. For instance, they visit Liliana, a 20-year-old single mother. Her daughter was happy that she would be going to school. This aspect means that bridging the gap between rich kids and poor kids is challenging unless there are well-developed strategies. Gneezy and List (2014) argued that schools and parent academies should develop a program on how to teach students skills that will be profitable in the future. The main types of skills required in learning include cognitive and executive skills. When they learn these skills, they will compete with those children from high-income families.
In chapter 6, Gneezy and List (2014) argue that economic discrimination happens everywhere and to everybody, whether one is black or white, abled or disabled. It shows that many companies, especially those with a vast online presence, tend to treat people differently depending on their lifestyle. For instance, they will track purchasing habits before they determine specific prices. If one is a smoker, the medical insurance will be higher because one has a risk of contracting other diseases. According to Gneezy and List (2014), the only way to reduce the aspect is by informing a company that one belongs to a group of people who should not be discriminated against.
Chapter 7 is an extension of economic discrimination. The authors argue that some people see economic discrimination as offensive, while others view it justifiable. In this chapter, the authors use car dealership experiments to seek comparison in economic discrimination. Most car dealers mistreat gay people and African American men. For instance, black men could end up paying more than $800 compared to white men. The only way to solve this problem is by developing policy-making tools and creating awareness that many people are engaging in the wrong type of discrimination.
Chapter 9 demonstrates the act of charitable giving. Gneezy and List (2014) carry out multiple experiments that have demonstrated wonders in showing people to engage and encouraging them to engage in charity as much as possible. The authors challenge many issues, such as refusing to participate in charity, especially those with unique and outstanding beliefs. The authors include how much seed money is required for a program to increase donation, tackle follow-up requests, and look for donors. They also touch on how to leverage lotteries, raffles, and tontines to increase success.
Chapter 10 is an extension of chapter 9, and it is about approaching people to participate in charity. The authors argue that many founders of charitable organizations are mainly driven by passion, but success needs acute business sense. In this case, the incentive will attract new donors and clients, and it is the first foundation for achieving long-term success. To maintain donors, a person should have learned a sizeable proportion of the motivation that will encourage them to continue raising money for charity.
Chapter 11 elaborates on the importance of a culture of experimentation to business. Business managers do not work in today's business environment. Gneezy and List (2014) state that businesses should employ innovative procedures and aspects that increase attention and bring in more clients, boosting profits. They use a case study of Netflix that failed to do field experimentation, which saw a drastic drop in stock prices in 2011. If they could have had a clear plan, the damage could have been smaller. The takeaway concept is that field experiments are a success to any business because it results in new product features.
Overall, Gneezy and List (2014) focus on experimental economics to create and investigate the actual economic behaviors analysis to test what makes individuals behave as they do. All studies are tied back to one principle; experimentation is a significant method to test a theory. The book is worth reading because it teaches a person that successful companies continuously learn from experiences and not just the prices but on the whole design of products and services.
Reference
Gneezy, U., & List, J. (2014). The why Axis: Hidden motives and the undiscovered economics of everyday life . Random House.
