This quotation is widely attributed to Charlie Munger, but a reliable primary or secondary source for the exact wording has not been established. It closely reflects ideas Munger expressed elsewhere about the power of incentives, but the attribution should therefore be treated as uncertain rather than definitive.

The statement expresses the idea that behaviour can often be understood by examining the rewards and penalties people face. Financial compensation, promotion, recognition, convenience and other incentives can influence decisions even when stated goals or intentions point in a different direction.

In organisations, poorly designed incentives can produce unintended outcomes, particularly when people are rewarded for narrow measures of performance. The broader principle is to examine the incentive structure behind behaviour rather than relying only on stated intentions. Incentives do not determine every action, but they can exert a strong influence on decisions and institutional outcomes.