Ask the Economist

 

 

 

 

 

 

 

 

 

 

 

Economics is the science of decision-making.

Every decision is an economics decision.

In this column every week, readers ask their most private questions and get advice from an economics perspective.
Dear Economist, If I earn bad grades, my dad says he will make me pay rent and will stop paying for my car insurance. My mom says that if I earn good grades she will pay for my vacation this summer. What’s up with the manipulation?!

                                                                                                                                                                                                         – Scooby

 

 

Dear Scooby,

Incentives matter. Both your parents are letting you know they think your internal motivation is underdeveloped. Your dad is using “the stick” of negative incentives to urge you, and your mom is using the “the carrot” of positive incentives. Are you focused on short-term cost/benefit analysis? Your parents are.

Your parents are also proficient in the push-pull technique of sales management – stop complaining that you have parents who care and maximize the benefits package offered. In other words: get your grades up!

Dear Economist, My child is struggling in college. He has the ability, but he needs to try harder. Should I use threats or bribes to motivate him?                                                                                                                                                                                                        – Mr. Progenitor

 

 

Dear Mr. Progenitor,

Threats are off the table due to the long term costs which are incurred. Consequences which are natural and not punitive is more in line with economics. Research shows that bribes don’t really work except in the short run – usually resulting in even less motivation for the activity once the incentive is removed. Some research shows positive long term results from incentivizing the behavior (inputs) and not the result (output). You have been subsidizing his behavior up until now, and his behavior reflects it. Your adult son must accept the good or bad consequences of his actions. This will be best in the long-run.
Dear Economist, I began at Hudson Valley Community College as a criminal justice major. I am three semesters in, but now I know I won’t be working in criminal justice. Should I change my major?

                                                                                                                         – Amy in Amstuz

 

Dear Amy,

This question epitomizes the fallacy of sunk costs. You should not throw good money after bad money. People will commit future resources to a failing endeavor because of loss aversion, goal fixation and a belief that they can salvage a mistake. Yes, change your major. Many adult students are back at school now and wish they hadn’t spent so much of the past years in the wrong field. Many people are in jobs that do not align with their college major. The best thing to do when you find yourself on the wrong road is to go back and get on the right one.

 

Need Advice? Write to Ask the Economist at estenardhudsonian@gmail.com

You might see your question answered in The Hudsonian!