Freakonomics

What happened to the numbers of parents who picked up their children late from daycare in Haifa, Israel when the business began charging a $3 late fee?

  1. What happened to the numbers of parents who picked up their children late from daycare in Haifa, Israel when the business began charging a $3 late fee?
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Incentives Matter:

This chapter helps the reader to distinguish among these types of incentives by using an example of a day care center in Haifa, Israel.Once a price is attached to being late to pick up one’s child at a daycare facility, parents react in an unexpected way–they show up late more often.The reason is that,before the fine was levied,most parents picked up their kids on time out of a sense of guilt–a social or moral incentive.Once the fine was levied,parents faced only an economic incentive.This,instead of a sense of guilt,was now the price for being late.Parents subsequently reassessed the benefits and costs and decided that the price was worth the extra free time.

Source(s)

Harper Collins/ Student Guide to Freakonomics