It should be a custom before beginning to learn any hard subject to write down the "why". Why are you venturing deep into the subject? The naive answer of "because learning is fun" will be obsolote once the subject really tests your persistence, when things become hard to grasp and its teachings don't align with your intuitions. These testing time will reveal how much you care about being good at it.
I've been successful at learning programming and related topics because I had a strong sense of why. Not because they were "fun". Don't get me wrong, programming is fun, but it is incredibly frustrating and overwhelming sometimes and a strong sense of why helped me get through those periods.
That's why it's no surprise that incentive is the very first keyword introduced in the course.
What is my incentive to learn economics? Truth be told, it really is "it would be fun". I can't think of anything better. There's also the usual motivation of being able to brag and virtue signal in front of your friends about my intelligence. I went through the first two lectures of this course, and already encountered a concept which changed the way I see the world (sunk cost fallacy). So I can't wait see what's ahead. Let's dive in then.
Incentives
Incentive is basically another term for motivation. "What is his incentive to do that" is basically another way of saying "What motivates him to do that"? Why is incentive so important though that it's the first term introduced in microeconomics course.
It's because microeconomics deals with effects and causes at a micro level, duh. And at the microest (don't know if it's a word) level is an economic agent. An economic agent can be a person, a household, a shop anything. And an economic agent behaves in alignment with his incentives. A weird question helps clarify this concept.
How would you stop sea captains from killing their passengers?
Note: the below excerpt was copied verbatim from this article
Back in the 1700s, the British government paid sea captains to take felons to Australia. At first, it didn't work so well, Tabarrok says:
About a third of the males on one particularly horrific voyage died. The rest arrived beaten, starved, and sick. I mean, they were hobbling off, those who were lucky enough to survive.
This was a scandal back in England, so the government tried to fix it with all different kinds of rules. Force the captains to bring a doctor along. Require them to bring lemons to prevent scurvy. Have inspections. Raise captains’ salaries. None of it worked.
The clergy begged the captains, for humanity’s sake, to take better care of the prisoners. No dice.
Finally, an economist (who else?) had a new idea.
Instead of paying for each prisoner that walked on the ship in Great Britain, the government should only pay for each prisoner that walked off the ship in Australia. And in fact, this was the suggestion which in 1793 was adopted and implemented. And immediately, the survival rate shot up to 99%.
Here is the first, fundamental lesson of economics: Incentives matter.
Incentives are at the heart of all kinds of things. Everything in the tax code is an incentive -- or a disincentive. When we change the regulatory rules for banks, credit card companies and mortgage lenders, we’re trying to change the incentives, to change their behavior.
But it can be tricky to get those incentives right.
Before the captains were paid to keep the convicts alive, they had different incentives -- "like keep food from the prisoners, and then sell the food in Australia," Tabarrok says.
Reward the captains for keeping the passengers alive, and -- voila! -- they arrive alive.
A good social order, Tabarrok tells his class, aligns self-interest with social interest.