Yesterday, Frank pointed to the "learn & earn" experiment coming soon to two Atlanta elementary schools.

With all the hubbub about incentives these days, it's easy to forget that many incentives don't just plop out of nature but are instead the product of human design. (The most powerful and enduring incentives are a product of human action, undesigned, but that's another conversation.) Incentives are always embedded in institutions, and some institutions are very good at producing very bad incentives. Paying kids to study is a bad substitute for the non-pecuniary incentives (many undesigned) to study, and doing so might also plant the seeds for later false expectations as to scope of remunerable activities. More generally, whenever social planners get ahold of the idea that incentives matter, I see red flags all over.

In yesterday's European Wall Street Journal, Eduardo Nolla hones the point in a beautifully satirical op-ed, "The Points of Life." (HT: Emilio Pacheco). I wanted to quote the whole article, but a few highlights instead.

Life is turning into an awards program.... British Foreign Secretary David Miliband, in his previous role as environment minister, proposed a personal carbon dioxide allowance card. Points would be deducted, for instance, when one bought appliances, gas or electricity, or took a flight. The poor would be able to sell their points to the rich and jet-set crowd.

Of course, that's the cap and trade idea run amok. More:

This is only a starting...point. Once a reward/punishment scheme is put in motion, its own logic will extend it until the totality of human behavior comes under its purview. New York pedestrians could be "pointed" under proposed legislation to ban the use of iPods and cellphones while crossing streets. In the future, a prohibition could also be called for other dangerous activities that diminish your concentration and put your life at risk, such as talking, holding hands, carrying cups of scalding coffee or jogging.

Happily, high-level officials all over the world are pointing in the right direction, aiming to make our lives better and assure us a healthy death. In Finland, new proposed legislation states that fat citizens must pay higher income taxes and higher health care. As a compensation measure, taxes on bicycles have simultaneously been lowered. Government plans are most likely on the way to penalizing anorexia, high cholesterol, bad breath, high blood pressure and soon, one hopes, plain stupidity.

Then there are the enforcment implications.

To run this kind of program efficiently and avoid tax cheaters, we must expect random health checks. If any of a number of clinically researched and expertly chosen health indicators is askew, we will be read our rights before being taken to the hospital: "You have the right to remain silent. Anything your body tells us can and will be held against you. You have the right to a doctor. If you cannot afford a doctor, one will be provided for you."

Okay, you get the gist (although you should read the whole thing for Nolla's political theory context). Overall, Nolla's essay seems like a subtle review Tim Harford's excellent new book, The Logic of Life. If so, when pointing to the dark side of incentives, Nolla and all of us should heed attention to the types of institutions and overt designs lurking behind all those bad incentives.