 When economists find a social problem of any kind what we usually do is we think well There must be some incentive which we can offer either a penalty or a reward Which will induce people to act as if they cared about the public good But economists have been in for some surprises recently In Haifa in Israel the parents were coming late to pick up their kids at the school And so the schools decided they would impose a fine on parents coming late There were 16 of the schools and in seven of them they imposed the fine and the rest they imposed no fine at all They just put a message on the door It said as of Saturday if you pick up your kids more than 10 minutes late You will have to pay 10 Israeli shekels as a fine And then they waited to see what happened and what happened surprised everyone because Parents became it came later to pick up their kids In fact twice as many parents came late to pick up their kids in the schools, which had the fine Well that led economists to start scratching their head because what's going on? Why did people respond negatively to the fine? Well, there's some obvious answers that economists will have to think about now The most obvious answer is this before the parents were feeling obligated They should come on time because it's inconveniencing to the teachers if they come late Or maybe their kid would be worried if they came late They had a moral obligation to come late and they tried to come late Of course, maybe there's traffic or some problem which prevented them now the school offers a wonderful deal Look here if you paid 10 Israeli shekels you can be late So lateness became a commodity something you could buy just like a shirt or anything else and for a good many parents 10 Israeli shekels was not so much and so they decided okay now we can purchase lateness But we have I think a pretty good explanation of what happened But it's a big wake-up call for economists now that we think about public policy Because the idea of the Israeli parents coming later when they were fined is an affirmation of the fact that those parents were Basically good people they weren't entirely selfish They were people who had a moral obligation to do well by the teachers now in economics as you know The standard assumption is that we just assume everybody is entirely selfish now Of course, we don't think that we don't think that about ourselves in relationship to our friends and our children and parents But we assume it as a discipline and it has led us to ignore the possibility That sometimes when we try to use monetary incentives to induce people to do the right thing It will it will reduce their desire to do the right thing for ethical reasons In other words, it will displace their moral reasoning in favor of a reasoning which is more appropriate for shopping and not appropriate for dealing with your children's teachers and so on This becomes very important when we think of problems that are hard to solve by laws and incentives In the world today, we're facing a series of really pressing problems For example everything from political violence to the spread of epidemic disease to global warming These are problems which we face in all of our societies and there are I think probably some Economists who think that it's possible to devise clever incentives so that we can address these problems I think incentives are essential to this process and we must have incentives to try to Improve these problems and address them But the idea that we could ever address these problems the ones that I mentioned and many others Just through the use of incentives seems to me to be fanciful and it's also very dangerous because in our public discussions At least economists seem to say well really we don't care about the values that people have Because even if people are selfish we can design a society in which will work pretty well Well, the news is Economists meaning me and other economists the news is for us. That's not true We can no longer count on the invisible hand of Adam Smith to organize Society among selfish people to work well as a society We have always been facing at Adam Smith's time to today, but even more so in the future We've been facing problems in which we need to have a moral citizenry Perhaps a diverse one with different values and so on but we have to count on people trying to do the right thing This poses a problem because we have to have then a public discussion About which of these values we should promote as a matter of governance and try to avoid the paternalism Which has been associated with these kinds of methods in the past