Updated: Aug 20, 2021

Economic arrangements which weaken the inducement to undertake a particular action. For example, a high marginal tax rate provides a disincentive to supply effort, and a low rate of interest provides a disincentive to save. Disincentives can be used to achieve policy objectives: a high tax on tobacco is a disincentive to smoke, and is used to encourage a healthier lifestyle.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.