So If Incentives Are Overrated…

New Nobelists Duflo and Bannerjee in the NYT:

[E]conomists have somehow managed to hide in plain sight an enormously consequential finding from their research: Financial incentives are nowhere near as powerful as they are usually assumed to be.

David’s critique is excellent.  But supposing Duflo and Bannerjee are right, I have a few questions.

If incentives are overrated…

1. Is it OK to reduce penalties for tax evasion?

2. Is it OK to cut regulatory enforcement?

3. Is it OK to curtail the right to sue?

4. Is it OK to cut pay and benefits for government employees?

My...