Things I Should Teach My Son, Part VI

Incentives. I could stop there.

In business and in life, incentives make all the difference. Understand the incentives on both sides before engaging in a transaction. Most investment managers get paid for how much money they manage, not how much money they make you. Real estate agents are more encouraged to get your house sold as fast as possible than they are to get you the best price. Even the best natured of people can get lead astray by misaligned incentives. Align your incentives with the people you work with (clients, customers and partners) and you’ll get a lot more done, with a lot less frustration. Most importantly, only engage in activities that incentivize you to act in line with what you believe.

I think you got a taste of that lesson when you wasted hours at the DMV the other day. Even though I’ve seen worse DMVs (**coughCaliforniacough**) than the one here, you saw the results of poor incentives. The DMV does not have to attract you. You must come in if you want to function in society, unless you want to do this. Also, DMV workers are paid whether you are satisfied or not. So there is zero incentive for the DMV to provide a good customer experience. You’ll be back no matter how much of your time they wasted.
Most adults yawn at “wisdom” like this. We’re used to it. But it’s a great way to learn about how incentives matter hugely. Welcome to adulthood!

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