Mason Stallmo

February 16, 2023

Perverse Incentives

The best laid plans with the best of intentions can and often do end with tragedy. Tragedy for the people involved with those plans directly and often tragedy that is far beyond a scope ever dreamed of by the plan makers.

This phenomenon is especially prevalent in the world of tech companies. These companies can often start with the best of intentions and the grandest vision of a better tomorrow. Few people start off a venture to intentionally intrench a bad system they claim to solve. In the pursuit of that grand vision practical decisions are made, often trying to keep money in the bank. It's these practical decisions that birth the perverse incentives.

As we come to another tax season in the US, a great example of this is TurboTax. The elevator pitch for TurboTax sounds great to most that have ever had to file taxes in the United States. "A software that will simplify the process of filing your taxes." As the behavior of TurboTax's creator Intuit shows solving this problem of complicated taxes has created a perverse incentive for them. It has directly incentivized them to intrench Americans filing their own taxes. If self filing of taxes happens, no more TurboTax, no more business. As you file your taxes this year, take a moment and thank TurboTax for having to do this at all.

Solve real problems, don't become promoters of existing ones. Don't be like TurboTax.