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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Perform, Then Pay, Part II

By Rabbi Dr. Asher Meir





http://www.JewishWorldReview.com | Q. I'm thinking of giving my workers an incentive by paying them according to their output. Are there any Jewish lessons for this question?


A. We pointed out last time that while paying workers according to output can be an effective way of increasing effort and can also have positive ethical consequences, it also has many ethical pitfalls. Last time we talked about output, and income, suffering for reasons beyond the worker's control, and the problem of sabotaging cooperation. This week we will continue with two other considerations we mentioned briefly:

  • Workers may end up favoring output over quality, leading to declines in product quality;
  • Workers may end up favoring output today over output tomorrow, and scrimp on maintenance etc. in order to reap bonuses in the short run.

The problem of distortionary incentives presented itself in ancient times, particularly in the context of sharecropping. Very often landowners were unable to or uninterested in farming all their land by themselves or using hired workers, and rented out the land to sharecroppers. In order to give the farmer an incentive to work hard and produce a large crop, a sharecropper is given a fixed fraction of the crop, which varies depending on market conditions. This arrangement persists in various forms even today.

The mishna and Talmudic discussion in the ninth chapter of tractate Bava Metzia examine in detail the arrangements that developed to manage the conflicting incentives in leasing land. The same conflicts exist today, and can be managed using similar management techniques.

MAINTENANCE

One problem with this arrangement is that the sharecropper may neglect maintenance or be indifferent to depreciation of the land. The depreciation is borne by the owner.

The chapter begins with the following mishna:

    One who leases a field from his fellow: where it is customary to gather, he must gather; to uproot, he must uproot; to plow after [harvesting], he must plow; everything is according to local custom.

While an owner-operator is free to make his own decisions about the way to cultivate his field, a sharecropper will be tempted to take shortcuts that will affect output in future years. For example, he may want to neglect plowing over the field after the harvest, since this will only affect yields in the following year or years.

Another problem is producing in a way that depletes the field, which in a modern business context might express itself as increased depreciation.

    One who leases a field from his fellow [on the condition] to plan barley, may not plant wheat [which depletes the field more]. To plant wheat, he may plant barley.

The sharecropper is entitled to exercise a certain amount of judgment regarding what to plant; indeed, one object of the sharecropper relationship is to decentralize and allow him to take advantage of his own familiarity and expertise. But this cannot be at the expense of the long-term viability of the field.

Even in the middle of the season a sharecropper may decide it is not worth his while to invest in a good crop since he only enjoys part of the yield. Thus even intra-season maintenance is regulated:

    One who lets a field from his fellow and doesn't want to weed, and says [to the owner]: What do you care, since I give you your rental? We don't accept his claim, for [the owner] can say to him: Tomorrow you may leave, and it is left with weeds.

LONG TERM RELATIONSHIP

The mishna equally recognizes that these issues are partly overcome by creating a long-term relationship:

    One who lets a field for few years may not sow flax, and is not entitled to sycamore branches. If he leases it for seven years, he may sow flax the first year, and he is entitled to sycamore branches.

If the field is leased for a long time, then the sharecropper will feel himself the negative effects of the flax, which depletes the field. So this decision can be left for him.

Another potential problem is that quality could be compromised. While the sharecropper shares some of the cost of reduced quality, some is borne by the owner.

LACK OF EFFORT

Another possibility of monetary incentives is that they may backfire. A regular employee faces a take-it-or-leave-it situation. If he doesn't do everything demanded of him he gets fired. But an "incentivized" employee has a choice. He can work harder than usual and get more, but he can also decide to work less hard and get less. The mishna deals with this problem by obligating the tenant to farm the land as long as it has some minimal potential:

    One who leases a field from his fellow and it didn't produce [much]: if there is enough to assemble a stack, he is obligated to tend it.

This bears an interesting reciprocal relationship with the previous consideration. In order to overcome some of the other incentive problems, there may be a desire to lock the employee into a long-term relationship. Yet this "solution" can create its own problem of under-incentivization.

As we emphasized last week, these considerations do not imply that performance-related-pay is always a bad idea. On the contrary, the sharecropper relationship was a very popular and widespread arrangement. The lesson we do learn is that these arrangements require careful thought to manage the conflicted incentives involved.

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JWR contributor Rabbi Dr. Asher Meir, formerly of the Council of Economic Advisers in the Reagan administration, is Research Director of the Business Ethics Center of Jerusalem, Jerusalem College of Technology.

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