What term describes a factor that motivates individuals to change their behavior?

The term that describes a factor motivating individuals to change their behavior is indeed an incentive. In economics, incentives are crucial because they drive individuals and businesses to alter their actions in response to changes in their environment.

Incentives can take many forms — they can be monetary, such as a bonus for performance, or non-monetary, such as recognition or social approval. Essentially, incentives align individual desires with certain choices or actions, encouraging them to take particular steps that they might not have taken otherwise.

For example, if a company offers higher wages to attract workers, it creates a positive incentive for potential employees to change their behavior by applying for those jobs. Conversely, negative incentives, like taxes or penalties, can discourage certain activities, leading individuals to modify their behavior to avoid these consequences. Thus, understanding incentives is critical for analyzing how and why individuals make decisions in an economic context.