Influence and incentives

Previously on TBBKA”DP?”, I wondered about the difference between having impact and having influence. Impact sounds like two independent bodies colliding; influence suggest two streams coming together. Another buzzword that’s a euphemism for power is “incentives.” The gradual invasion of economic thinking into every corner of life continues apace; the power of incentives is one of the signal contributions of the dismal science to popular discourse in the past several years (witness the success of “Freakonomics”).

If impact is hard power, and influence is soft power, what are incentives? They’re relational and structural. Incentives are a function of a situation: the importance of grades and test scores for admission into competitive colleges incentivize students to cram for tests. They’re relational both synchronically (at a given moment) and diachronically (over time). Someone or something incentivizes you at a given moment (study hard and you’ll get a good grade on the test) and/or over a period of time (keep studying hard over the years and you’ll eventually get into a good school). Because they’re structural or situational, incentives can be nested: study to get grades, get grades to get into school. In fact, incentives may be most powerful when they’re most embedded. Tocqueville said revolutions would be increasingly less likely in America because more and more people had a stake in the functioning of the system. If you own property, you have the obligation of a mortgage and need money to keep coming in; there are multiple sets of incentives that link up in straightforward ways.

The thing about all these incentives is that they’re visible and relatively easy to understand. Influence can be quieter, work behind the scenes. When two rivers converge, you can’t tell where one starts and the other ends. (Well, except for the black and sandy Amazon Rivers.) Incentives are visible and accessible to all; influence is either so dispersed as to be essentially invisible (What determines whether a movie ends up being popular? We see it happen, but no one can really explain why, so the mechanism of influence remains mysterious.) or hidden out of public sight (whatever happened to the climate bill?).

So maybe impact is hard power, incentives are visible soft power, and influence is invisible soft power. How might these concepts be useful for understanding the way nonprofits and philanthropy do or do not make a difference on the issues they care about?

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