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Traditional Pay vs. Incentive Pay

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Discuss the differences between traditional pay systems and incentive pay systems. Which system would you prefer to be used at your company? Explain your choice.

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Traditional pay systems are used to compensate an employee based on their hourly rate or their annual salary. Pay increases are determined by factors that include their seniority and performance. The traditional pay model assigns a grade level to positions based on education and experience that is required to perform ...

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This solution provides a discussion about traditional pay systems and incentive pay systems.

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Are economic incentives the most ethical way to implement environmental policy?

In his book, What Price Incentives?, Steven Kelman suggests that from an ethical point of view, the use of economic incentives (such as emission charges or emissions trading) in environmental policy is undesirable. He argues that transforming our mental image of the environment from a sanctified preserve to a marketable commodity has detrimental effects not only on our use of the environment, but also on our attitude toward it. His point is that applying economic incentives to environmental policy weakens and cheapens our traditional values toward the environment.

a. Consider the effects of economic incentive systems on prices paid by the poor, on employment, and on the speed of compliance with pollution control laws as well as the Kelman arguments. Are economic incentive systems more or less ethically justifiable than the traditional regulatory approach?

b. Kelman seems to feel that because emission allowances automatically prevent environmental degradation, they are more ethically desirable than emission charges. Do you agree? Why or why not?

c. If we were to allow the private market to bring about an efficient outcome that society would deem desirable, do you think they would be able to effectively reflect the true market benefit and cost?

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