Discover Your Inner Economist

In his delightfully witty and humorous book, Discover Your Inner Economist, Cowen takes the dry and stark subject of political economy from the mundane to the everyday. He begins by subtly stating that scotchs is non ab prohibited money, but other pauperisms. The critical economic task is scarcity, he asserts. Money is scarce, but in almost things the scarcity of time, attention, and condole with is more most-valuable. In a highly aimless, rambling style, Cowen leads the reader floor many divergent paths from topic to topic, covering everything from how to talk your spouse out of bargaining a warranty on a new procure to why your daughter will non wash the dishes to why we do not dedicate to eat sunk costs. Throughout the book, two themes ar clear. The first is that everyone is very self-c get intoed, and motivation is all about Me, or as Cowen calls it, the Me Factor. The next motif, although highly correlated to the former, is control. Both themes encompass the fa ntasy of identifying motivation.The key to tapping your Inner Economist, Cowen explains, is the ability to identify volumes true incentives, which ar usually more than money. Suppose you urgency your daughter to help out around the house by washing dishes. Should you pay her? Bad whim, Cowen warns. If you explain that washing dishes is her family responsibility, she may not always obey, but at least shell feel rough(prenominal) obligation. Bring payment into the draw, and her motivation changes. It becomes a market transaction, writes Cowen, and the pargonnt becomes a boss or else than an intent of deserved loyalty. The evidence is that your daughter will shortly come to escort that she would rather work for someone else. Expect dirtier dishes, Cowen concludes. Motivation and incentives are clear interesting to us all, whether we acknowledge it or not. In his book, Cowen shots some whimsical theories on motivation and incentives. Big business is very interested in th e apprehension of motivation as the goal of any business is to be most procreative, and this requires incite employees to become their most productive. It is the responsibility of managers to strive to go employees so that they will make valuable contributions to the organization.Managers most frequently do this by offering rewards to motivate people to share their talents with the company. Managers seek to turn back that people are motivated to contribute important inputs to the organization, that these inputs are think in the direction of high performance and that high performance results in employees obtaining the outcomes that they desire. Management theorists have come up with many theories to explain what creates a motivated workforce. Cowen believes that small improvements in understanding will bring a much best use of incentives (motivation).Cowen uses economic theory as the bag for using pattern recognition to incentivize. His book does not offer solicitude theory, however, the author focuses on learning how humans in general are motivated, and these theories can be applied to business, personal lives, and just ordinary living. mull and research have proven that motivated employees are more productive than those employees who lack motivation. On this assumption, a look at some of the most widely known motivation theories may add some cortical potential into the role of incentives as effective motivators. Frederick Herzbergs theory is based on two concomitantors Hygiene and Motivation.The hygiene ingredients are based on extraneous values such as salary, working conditions, ergonomics, status, and company policies. These factors, according to the theory, do not lead to motivation, but the absence of arrogant hygiene factors causes dissatisfaction. Herzbergs other factor is motivation, which encompasses those work conditions that prompt native motivation. These factors include farm out satisfaction, growth, earnment, and recognition. According to this theory, in order for employees to be motivated, there must be low levels of dissatisfaction and high levels of motivational factors.Herzberg suggests these factors should be used together to overcome dissatisfaction and increase motivation to achieve high productivity. Another famous motivation theory is Maslows Hierarchy of Needs. This theory is based on the concept of levels of impoverishments in human beings. This theory suggests that each level of need must be satisfied before someone is motivated to achieve the next level. The lowest level is physiological, then safety, then love, esteem, and finally self-actualization. The adjacent chart from Accel- Team illustrates Maslows theory (Accel Team, 2007)From an economists point of view, in Cowens book, one economist, Colin Camerer took a poll at the Davos being Economics Forum and polled big business gurus as their ideas on motivation. The subjugate one and two answers were, respectively, Recognition and Re spect, and Achievement and Accomplishment. Never mind that the sources may have been slightly skewed, he was polling a particularly successful pigeonholing of businessmen and not average employees, but the point is that money did not make the top two as far as incentives go. Cowen does grant money its proper place within the motivation/incentive model, however.He does not dismiss money as a primary motivator, he just sets it a incline as the single most obvious incentive to discontinue thought for other, equally motivating incentives. Cowen demonstrates by example how the idea of everything being up for market is repulsive to humans. He notes that there are some things that simply cannot be motivated through monetary incentives. At the seed of the book, as mentioned above, Cowen discusses the resistance of his stepdaughter, Yana, to washing the dishes. After he and his wife resorted to pay her, she did them for about a week and then stopped, he says.I knew this could happen. I understood that there is such a thing as intrinsic motivation and that if you pay people, you might weaken that. What I didnt truly get was the control issue. That when you start paying people to do a thing, they often see it as control. notwithstanding there was a joyful ending After Yana read the book, she started doing the dishes. For free. Cowen believes that we are also consumed with the desire for control. Cowen argues that if you want to have more control of what happens around you, you need to know how to brace the kinds of incentives you offer.As far as trade good reading, unfortunately, there are not becoming economic tricks that break down neatly into interesting advice. When he discusses the techniques for motivating your tooth doctor, akin giving them a bonus for cavities well filled, he ends with, I dont think I can control my dentist or receive the very outgo care. By giving up this quest for control, however, I might get care that is just a little better t han average. Is that really any advice, or just an economist attempting to relate to real humans? Economics cannot tell you what the price of currency will be next week.But it can help you choose good eaterys, promises Cowen. The scoop out sections of the book concern tactics for maximizing ones cultural consumption, (at least according to Cowens standards). Cowen explains that those of us who enjoy preposterous and tasty flavors in our meals should avoid restaurants located in fancy obtain malls or on major thoroughfares. These restaurants must pay high rents to contract such locations and, therefore, they need customers in high volumes. Because these restaurants must appeal to sizable audiences, meals there will be more predictable and bland than those served in restaurants located off beaten paths.So if youre hankering for dinner at a restaurant featuring bold or unusual tastes at a restaurant that serves ethnic dishes that are truly authentic youll have better mountain going to a Chinese or Ethiopian or Cajun (or whatever ethnic variety you crave) restaurant that is located on a side street or in a suburban strip mall. With discredit rents to pay, such off-the-beaten-path eateries are more likely than are restaurants in high-rent locations to furnish to serious foodies. Choosing a restaurant is just one of many important and surprising insights offered in Cowens book.He lists eight strategies for taking control of ones reading, which include ruthless skipping around, following one character while ignoring others, and pull down going directly to the last chapter. Your eighth-grade English teacher would faint. But the article of belief here is valuing the scarcity of your own time, which people often fail to do. It kit and caboodle for movies, tooCowen will go to the multiplex and watch parts of ternary or four movies, rather than just sit through one. why wait for a highly predictable ending when a mythic scene might be unfolding in the mo vie play next door?Cowen also offers advice for how to defeat the boredom that, despite our best intentions to be culturally literate, overtakes many of us minutes after we enter an art museum. How do we deal with this scarcity of attention? Pretend to be an art thief, he suggestsin every gallery, pick one picture that wed like to run off with. Sounds juvenile, admits Cowen, but it forces us to deliver thinking critically rather than daydream about the snack bar. Cowen doesnt really attempt to offer serious advice. He does offer some interesting anecdotes, however.Among the most valuable insights that economics does offer about investment funds is to ignore anyone who announces publicly that he knows what will happen to stock prices tomorrow. Anyone who sincerely yours believes himself to possess such knowledge will not give it out-of-door or sell it on the cheap. To do so would be like passing out hundred-dollar bills to strangers or offering to sell hundred-dollar bills for $2 5 each Very few people are so selfless. If I am confident that shares of, say, IBM will rise tomorrow, I dont want other people competing with me to scoop up IBM shares.But finding a good meal, well, thats a variant story. The most interesting insight for me is that bygones are not always best treated as bygones. The mid-19th-century economist William Stanley Jevons famously wrote that bygones are forever bygones. Economists have overwhelmingly taken Jevons statement as advice to ignore sunk costs. This advice primarily is sensible. Suppose youve spent $10 million building a railroad car that can do nothing but produce chocolate-covered pickles. You discover soon afterward that no one wants to purchase your product.Your wisest course from this point onwards is to suck up the loss. Continuing to produce chocolate-covered pickles that no one wants to buy will only deepen your losses, doing nothing to help you recover your investment. But Cowen shows that bygones should not be tr eated as bygones in all areas of life. When our self-image is at stake, past choices costs that are irrevocable often remain applicable for guiding our closes today. Self deception is another theme through which Cowen offers examples of our Me send-off mentality.For example, many of us think of ourselves as physically fit. Because of this self-image, we often buy memberships in lycees. But on many an nonethelessing, after a keen-sighted day at work, were typically tempted to relax at home rather than spend an hour exercising at the gym. The economically rational decision is to stay home and relax if thats what you prefer doing this evening. After all, whether you go to the gym or not, the money youve spent on your gym membership is already spent. Youll not get that money back if you dont use the gym this evening.So the fact that youve already paid for a gym membership should not factor into your decision on whether to go to the gym today. But sometimes this fact does indeed matter. Sometimes we think, Geez, Ive paid for that gym membership. I should go. And we then beat up our remaining energy and head off for some exercise even though if we hadnt paid for the gym membership, we definitely would avoid the gym this evening. Again, as a narrow economic matter, thats a silly thing to say and do. From a less-narrow perspective its entirely reasonable.By going to the gym we reinforce our positive self-interest. And if the mental trick of pretending that sunk costs are germane(predicate) helps in this effort, its a worthwhile thing to think. For a wonderfully pleasant and practically useful read you can do no better than to discover your inner economist by reading Tyler Cowens new book. Tyler Cowen is a professor of economics at George Mason University. He is a spectacular blogger at marginalrevolution, the worlds leading economics blog. He also writes regularly for The radical York Times, and has written for Forbes, The Wall Street Journal, and The W ashington Post.The book is a quirky, neat caper through everyday life that reveals how you can turn economic reasoning to your advantageoften when you least expect it to be relevant. Cowen aims to not hit the reader over the head with economic principles, but to offer an alternative viewpoint of economics and how it really can improve anyones everyday life. Even if you dont agree with all of Cowens cheerfully offered opinions, its a pleasure to accompany him through his various interests and obsessions.