Something that provides a motive for a person to choose a particular course of action. Organized cooperative activities in a social setting -- such as cooperation for the purpose of economic production -- depends upon each of the participants having some sort of incentive to behave in the required cooperative fashion. Different societies (and even different organizations within the same society) vary considerably in the nature of the incentive systems upon which they characteristically rely to organize their common projects.

Incentives may be classified according to a number of different schemes, but one of the more useful classifications subdivides incentives into three general types: moral incentives, coercive incentives and remunerative incentives.

  • A person has a moral incentive to behave in a particular way when he has been taught to believe that it is the "right" or "proper" or "admirable" thing to do. If he behaves as others expect him to, he may expect the approval or even the admiration of the other members of the collectivity and enjoy an enhanced sense of acceptance or self-esteem. If he behaves improperly, he may expect verbal expressions of condemnation, scorn, ridicule or even ostracism from the collectivity, and he may experience unpleasant feelings of guilt, shame or self-condemnation.

  • A person has a coercive incentive to behave in a particular way when it has been made known to him that failure to do so will result in some form of physical aggression being directed at him by other members of the collectivity in the form of inflicting pain or physical harm on him or his loved ones, depriving him of his freedom of movement, or perhaps confiscating or destroying his treasured possessions.

  • A person has a remunerative incentive to behave in a particular way if it has been made known to him that doing so will result in some form of material reward he will not otherwise receive. If he behaves as desired, he will receive some specified amount of a valuable good or service (or money with which he can purchase whatever he wishes) in exchange.

All known societies employ all three sorts of incentives to at least some degree in order to evoke from its members the necessary degree of cooperation for the society to survive and flourish. However, different societies differ radically in the relative proportions of these different kinds of incentives used within their characteristic mix of incentives. "Primitive" or "traditional" cultures such as those of hunter-gatherers tend to rely very heavily on moral incentives and make relatively little use of coercive and remunerative incentives to sustain social cooperation. More "advanced" or "modern" societies built around a much more specialized and complex division of labor tend to make much greater use of both coercive and remunerative incentives in organizing social activities, while still relying in very important ways upon moral or normative incentives. Among the more "advanced" societies, liberal societies try to rely as much as possible on remunerative and moral incentives in preference to the use of coercive incentives, while authoritarian and totalitarian societies display much less reluctance to resort to coercive incentives in securing social cooperation.

[See also: division of labor, specialization, ideology, liberalism, totalitarianism, agency problem]