Incentives Explain Conduct but Cannot Decide What Is Right

Adam Mastroianni accepts the basic economic insight that incentives shape conduct. Pollution, polarizing social media, and scientific fraud do not arise simply because bad people carry around an internal stock of badness. People have reasons for what they do; changing rewards and constraints can change behavior.

But an explanation can become an excuse. Mastroianni’s deliberately abrasive formulation is that following an external reward structure into conduct one recognizes as wrong is “loser behavior.” Promotion, money, status, or approval may be hard to refuse. None settles whether the action should be taken.

Most ethical compromises do not arrive as obvious villainy. Russ Roberts offers the example of someone running a social-media account whose compensation depends on attention and clicks. That person need not fabricate a story. They can shade a headline—make it angrier, crueler, or less honest than the story warrants—then tell themselves that the publication needs readers and competitors are doing the same. The incentive explains the temptation. It does not determine the right response.

Roberts connects the problem to Ursula K. Le Guin’s The Ones Who Walk Away from Omelas. The city is beautiful and prosperous, but its happiness depends on a child held in horrific conditions. Everyone knows the arrangement. Some inhabitants leave rather than accept the bargain, even though departure means giving up comfort and abundance. Roberts reads the story, at least in part, as an anti-utilitarian challenge: collective benefit does not necessarily justify grotesque harm to one person.

Mastroianni’s concern is that ordinary complicity is less visible than the arrangement in Omelas. Modern systems are more like a Rube Goldberg machine. A person may be “three warehouses away” from the harm: not directly inflicting it, but occupying one link in a causal chain that ends badly. Declining to become a tobacco company’s vice president of brand partnerships does not look like a dramatic moral exodus. It can look like an unremarkable career decision.

Complexity can produce two evasions. One is resignation: because there is no perfectly clean way to participate in society, one might as well participate without restraint. The other is the conviction that the whole system must be destroyed because an individual departure changes nothing. Mastroianni rejects both. A person cannot control every consequence of their work or consumption, but that does not eliminate the choices within reach: what one values, what good one can do, and what conduct one will refuse.

The deeper failure, on his account, is outsourcing judgment. A bureaucracy, market, employer, professional norm, or social circle can tell a person what will be rewarded. It cannot answer the prior question of whether the reward deserves to govern their conduct. Mastroianni treats the formation of a value system as part of human development—figuring out what is right and wrong, where one fits in, and how one can increase the former while decrease the latter. To hand that task over to incentives is to let someone else “colonize” one’s values.

He does not think moral character can be centrally manufactured. A government mandate to become more ethical is not the answer; attempts to impose virtue from above can turn dark quickly. The relevant work is personal and cultural: expect moral judgment of oneself, encourage it in others, and try to become the kind of person who does what is right even when it is costly.

Roberts’s found-wallet example clarifies what is at stake. He recalls asking high-school students whether they should keep money from a wallet found in the street when no one had seen them pick it up. They unanimously answered yes, because keeping it was rational. Roberts’s objection was simple: rationality does not establish moral rightness.

That distinction should not be dissolved by saying an honest person receives private satisfaction from doing good. Some people may feel satisfaction; others may feel only the money or opportunity they gave up. Ethics matters where duty and direct self-interest actually diverge. Returning the wallet can be the right act even for someone who would prefer to keep the money.

Mastroianni describes the alternative as a kind of clarity: no longer constructing elaborate explanations for why the option that benefits oneself is also the moral option. A person who resolves to do what they think is right, as best they can determine it, can make peace with the consequences rather than endlessly rationalize around them.

The moral work Mastroianni describes does not usually begin with a calm audit of one’s beliefs. It begins with what he calls a “big fish”: an encounter with an assumption so destabilizing that taking it seriously might upend a person’s life.

The metaphor comes from H. P. Lovecraft’s “Dagon,” in which a man sees a fish-god so grotesque that he is never mentally right again. Mastroianni does not recommend Lovecraft’s stories generally, but finds the structure useful. Everyone may have some unexamined belief—a foundation beneath their ordinary life—which they would have to rebuild if they really looked at it. Seeing the fish is another version of opening the door in Omelas and finding the child.

For Mastroianni, one such moment came at the annual social psychology conference in San Francisco in early 2020, shortly before the pandemic shut down such gatherings in the United States. The hotel was in the Tenderloin, which he remembers as a scene of severe human misery, including people dying of overdoses in the street. Inside, attendees ate canapés and presented research on social problems, including efforts to reduce implicit bias by tiny amounts that might be indistinguishable from noise.

The contrast made him question whether the field was taking its stated concerns as seriously as it claimed. He believes homelessness and drug addiction can be addressed through greater knowledge, though society does not yet know the solutions or how to secure their adoption. What he doubted was that the professional activity inside the hotel was likely to bring those solutions closer.

The moment echoed a familiar social-psychology study involving seminary students. Participants were assigned to deliver either a neutral talk about career opportunities or a talk about the Good Samaritan, then told they were early, on time, or late. On their way to speak, they encountered a confederate slumped over as if in distress. Mastroianni notes that it is an old study whose findings should be treated with caution. But its result is central to his point: whether students stopped was driven not by the subject of their lecture but by whether they thought they were in a hurry. People preparing to explain why one should help those in need rushed past someone apparently in need because they believed they were late.

Social psychologists at the conference were not simply reenacting that experiment. Yet Mastroianni was struck by what he experienced as an absence of visible conflict. A discipline that taught such a lesson could proceed through its professional routines beside obvious suffering without apparently registering the dissonance. That indifference was the fish he saw.

Mastroianni finds a more consequential instance in Charles Sumner’s abolitionism. According to Mastroianni’s account, Sumner grew up poor in Boston near a large population of formerly enslaved people. Later, at the Sorbonne in France, he saw Black and white students studying together as equals. Mastroianni says Sumner wrote in his diary that differences between people could not be matters of nature; they had to be matters of education, because equality in learning was visibly possible.

That recognition, as Mastroianni tells it, led Sumner toward positions that were radical even among opponents of slavery: abolition, racially integrated schools, and Black suffrage. As a senator, after a fierce anti-slavery speech attacking Southern congressmen, he was beaten nearly to death with a cane by one of them. Trapped at his desk and left in a pool of blood, he took more than a year to recover. When he returned, Mastroianni says, he resumed the same struggle, including pressing Abraham Lincoln toward an Emancipation Proclamation before it arrived.

Mastroianni does not present Sumner as right on everything; he says Sumner showed little interest in women’s suffrage or women’s rights. But Sumner represents the kind of courage he admires: someone who absorbs extraordinary punishment and returns to the work. He says positions and legislation that failed or were watered down in Sumner’s own era later reappeared in civil-rights law.

Russ Roberts sees Sumner’s experience at the Sorbonne as more than a successful argument. It was a collision between experience and inherited belief that made his old assumptions untenable. Both Roberts and Mastroianni doubt that fundamental moral changes usually result from analytical reasoning alone. A person can resolve to inspect their deepest beliefs, but it is difficult to reason one’s way down to the foundations of identity.

Mastroianni thinks some inciting event may be necessary to open that door. Then comes the consequential choice: go down into the basement, look around, and change one’s life if needed—or close the door and continue walking. He does not know how to find the fish on command. Perhaps, he says, the fish finds the person. It may take something that reaches “deeper in the gut” than a chain of logical analysis.

Not every revision need be a conversion. Roberts describes attending a silent meditation retreat oriented toward empathy. He does not claim it remade him, and acknowledges he remains capable of insensitive reactions. But he believes it made him somewhat less judgmental and more receptive to the thought that everyone is in a battle and should be met with kindness.

For Mastroianni, marriage has supplied a more intimate confrontation. Living with his wife has revealed how readily his first reaction is to ask what is best for him. He has had to learn that the first question can instead be what is best for her, or for them together. The lesson is obvious in the abstract, he says, but becomes real when the stakes are how to build a shared life rather than protect one’s solitude.

The institutional question is not whether incentives matter. It is whether institutions can reward useful conduct without selecting for people primarily motivated by the rewards themselves.

Academic life is Mastroianni’s sharpest example. Roberts recalls entering academia in the late 1980s on roughly $18,000 a year and being happy to earn less than he could have made in finance or a corporate economist role. The compensating attraction was teaching and discovery. As some academic salaries have reached $500,000 or $750,000, he wonders whether a profession can retain the honesty and truth-seeking norms that originally justified it.

Adam Mastroianni does not principally argue that high salaries corrupt scholars who would otherwise have been good. The more serious problem, in his view, is selection. A position offering $750,000 may attract people motivated by $750,000, and those may not be the people who value truth above all else.

If institutions could reliably distinguish the person motivated by truth from the person motivated by salary, high compensation would not create the same difficulty. The reward could attract able people without determining who received the role. But Mastroianni argues that institutions are poor at reading motives, while the people doing the selecting are often subject to the same incentives. That produces a vicious cycle.

Money is only one form of reward. In much of academia, status may be the more pervasive one. The difficulty is that status markers present themselves as knowledge markers. Publication in a prestigious journal is treated as evidence that the work itself is good. Scholars speak of “targeting” papers to journals, or of accumulating “pubs” and “A-pubs,” as if the institutional designation is the thing being sought.

Mastroianni says he finds that language “vile and repulsive,” like “defacing a crucifix.” The reaction is not to publishing itself but to the substitution of a status game for an activity that is supposed to hold truth sacred. He left academia not because he was unwilling to bear costs. He says he would have accepted lower pay, job insecurity, and moving around the world in exchange for studying what he thought mattered and describing it accurately. What he would not accept was paying those costs while being expected to produce junk papers or fudge statistics.

In his metaphor, he was willing to pay a penalty for an item he valued. The trouble was that the store did not sell the item.

His academic job search gave that conviction a direct cost. Mastroianni still valued his dissertation and thought it held up, but he had concluded that producing another hundred studies of the same kind was not the path toward the more fundamental transformation psychology needed. At the institution where he most wanted a job, he could have concealed those doubts and presented himself as someone prepared to continue producing prestigious publications.

Instead, after discussing his dissertation, he told the audience that he thought the future of psychology was “way weirder,” that a new paradigm might be possible within their lifetimes, and that he did not want merely to repeat the work he had shown them. In private conversations, people told him they found the view interesting but did not know what others thought. Nobody openly identified themselves as opposed. He did not get the job.

The day was among the most frightening of his life, Mastroianni says, but it also made him feel powerful. He had told the truth and accepted that the desired position was gone. He felt free among people who held jobs he had supposedly wanted because he no longer needed their approval on terms he rejected. He does not claim their choices were necessarily wrong for them. His point is that accepting a loss one can endorse deprives an institution of one form of leverage.

Mastroianni later describes that freedom through the language of negotiation. A person’s BATNAThe best alternative available if a negotiation fails.—the best alternative to a negotiated agreement—limits what another party can force them to accept. Someone with another good job offer can walk away from a bad one. An internal value system, he suggests, is like a standing outside option: people can take resources, impose constraints, and cause suffering, but they cannot wholly dictate one’s conduct.

His image is an artist who wants to paint. Take away the paints and the artist draws in dirt; take away the dirt and the artist draws in the mind. This is not the power to coerce others. It is the power not to be internally conquered by them.

This is where Mastroianni both agrees and disagrees with Milton Friedman’s argument that political systems should make it profitable for the wrong people to do the right things. Better systems remain a worthwhile and difficult intellectual project, he says. But systems are made out of people: officeholders, voters, selectors, and those who hold one another accountable. Good officeholders cannot sustain good government if the people they serve do not care whether they act well.

He therefore sees two levers rather than one. Improve systems so they reward better conduct, and develop people who will do what is right regardless of the system around them. Neither substitutes for the other. A structure can direct incentives, but it cannot eliminate the need for judgment about what should count as success.

The question of how to make oneself useful is, for Mastroianni, among the hardest human tasks. He sees it as a particularly modern problem. For much of history, career options were far narrower.

The question was how to make seeds grow, not whether to farm, work for Philip Morris, or choose among innumerable possible roles. Finding one’s place is not a one-time act of self-discovery. It is a moving target requiring time, humility, and revision.

Nor is it merely private. People seek purpose for their own happiness and success, but others benefit when someone finds a role in which they contribute well, and bear costs when that process goes badly. Mastroianni argues that people therefore owe each other both patience and help in working out how to contribute.

Roberts resists locating the problem only in vocation. He returns to the smaller choices: exaggerating an expense report to receive a larger reimbursement, or staying silent on behalf of a coworker because both people are competing for the same job. There is no magic technique for sustaining a life that does good rather than simply feels good, he says.

The speakers leave unresolved which direction moral formation runs. Perhaps getting minor ethical decisions right prepares a person for larger acts of courage. Or perhaps finding the right vocation supplies the freedom to be generous in everyday conflicts—to speak up for a colleague because one no longer feels compelled to hoard every advantage.

But the two questions are linked rather than competing. Vocation concerns the systems and roles a person elects to serve. Everyday conduct concerns the compromises they permit once inside them. A person cannot make every institution clean, and cannot know in advance every consequence of a career choice. The obligation, as Mastroianni frames it, is still to form a judgment that does not simply defer to what pays, what flatters, or what everyone else appears willing to accept.