In an attempt to get parents to pick up their kids on time, a number of Israeli day-care centers decided to impose fines on parents who show up late.
Unfortunately, after the fines were imposed, the frequency with which parents showed up on time actually decreased.
But wait, how can this be when Mankiw's Fourth Principle of Economics is that "people respond to incentives"?
Evidently, the answer is that people also respond to inner angels that tell them to do the right thing, unless of course they're paying to do otherwise.
- "A Fine is a Price" by Uri Gneezy and Aldo Rustichini, in the Journal of Legal Studies 29 (January 2000): pages 1-17
- What Money Can't Buy, 2012 book by Michael Sandel, page 64
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