Another entry...
Well this evening, I don't need to write about much.
One recent event though, that me and Jenny broke up; but that's okay, life moves on as does many other things.
Instead, I though it would be great to review some critical applications of microeconomic consumer theory on some everyday phenomenon of mine. Unfortunately since this evaluation lacks the econometric data that would be substantial in presenting it, it'll have to do with mere descriptions.
Anyways, to begin with typical choice I make everyday. For example, a decision between studying and going for a run. I would have to say that this choice between two typical preferences involves the perceives benefits from each activity. I will study, for enjoyment, and to do better in school; I will run, to stay fit, and do better in the next competition. Weighing these two out, I must evaluate the present value of the investment in these activities. Will running today benefit me in a competition several months from now, more than studying will benefit me in a test several months from now.
To evaluate how the present value is reflected, is based on the enduring value of each investment activity. In the case of studying, the knowledge gained (on average) stays with me longer than the additional fittness gained from going for a run. So going for a run is not a long-lasting investment, while studying is.
In the end, the desired benefit which fits my preferences would be to enjoy my studies, be fit, and do well in both tests and competitions. So then there is immediately another dimension added to the decision here. This makes rating the prefernces a function of both the enduring and last benefit, and also my personal preference towards each of these activities end results. Ultimately I believe that I appreciate more the results from studying. But not so much to the extreme that I'd totally give up running.
However, to return to the idea of how running's benefits fail to last as long as studying, then this factors also into my own preferences.
There is one last thing that needs to be reconciled in this as well, which is the cost of performing each of my choices. I can study for an hour, or run for an hour, and not both; their respective exculsions makes their respective costs the other activity, if I assume for the moment that these two possibilities are in fact the best things i can be doing (which I think they are currently). So if the costs are just the opportunity costs involved, then the real costs can only be part of the preferences themselves, almost. But rather that part of the present value of part-taking in each activity now.
I said that running yield less future benefits, since it is less enduring. But it is precisely because of this feature that I will choose to run. I have to run more often, to equal the same amount of benefits I receive from studying a little.
This idea explains a lot about how people will spend all their time at home cleaning, cutting the grass, etc. and only occasionally go out for a movie. Not just the fact that they hold domestic cleanliness in high regard, but also the fact that cleaning deteriorates much faster that the memory of going to a good movie. The rest of the decision, however is left to the personal preferences between the ultimate result of performing each activity.
Anyways, I suppose by analysing my choices tonight, I realized that when the costs (opportunity costs) are only the respectively opposite activities, then the real cost that emerges is the present or enduring value of each activity, which would then be multiplied by the personal prefernces between each activity's results; according to the resulting ratio of products, a person would chose their actions in direct proportion to that ratio.
That's a nice little thought and microeconomic analysis to have on a Sunday evening.
:)
One recent event though, that me and Jenny broke up; but that's okay, life moves on as does many other things.
Instead, I though it would be great to review some critical applications of microeconomic consumer theory on some everyday phenomenon of mine. Unfortunately since this evaluation lacks the econometric data that would be substantial in presenting it, it'll have to do with mere descriptions.
Anyways, to begin with typical choice I make everyday. For example, a decision between studying and going for a run. I would have to say that this choice between two typical preferences involves the perceives benefits from each activity. I will study, for enjoyment, and to do better in school; I will run, to stay fit, and do better in the next competition. Weighing these two out, I must evaluate the present value of the investment in these activities. Will running today benefit me in a competition several months from now, more than studying will benefit me in a test several months from now.
To evaluate how the present value is reflected, is based on the enduring value of each investment activity. In the case of studying, the knowledge gained (on average) stays with me longer than the additional fittness gained from going for a run. So going for a run is not a long-lasting investment, while studying is.
In the end, the desired benefit which fits my preferences would be to enjoy my studies, be fit, and do well in both tests and competitions. So then there is immediately another dimension added to the decision here. This makes rating the prefernces a function of both the enduring and last benefit, and also my personal preference towards each of these activities end results. Ultimately I believe that I appreciate more the results from studying. But not so much to the extreme that I'd totally give up running.
However, to return to the idea of how running's benefits fail to last as long as studying, then this factors also into my own preferences.
There is one last thing that needs to be reconciled in this as well, which is the cost of performing each of my choices. I can study for an hour, or run for an hour, and not both; their respective exculsions makes their respective costs the other activity, if I assume for the moment that these two possibilities are in fact the best things i can be doing (which I think they are currently). So if the costs are just the opportunity costs involved, then the real costs can only be part of the preferences themselves, almost. But rather that part of the present value of part-taking in each activity now.
I said that running yield less future benefits, since it is less enduring. But it is precisely because of this feature that I will choose to run. I have to run more often, to equal the same amount of benefits I receive from studying a little.
This idea explains a lot about how people will spend all their time at home cleaning, cutting the grass, etc. and only occasionally go out for a movie. Not just the fact that they hold domestic cleanliness in high regard, but also the fact that cleaning deteriorates much faster that the memory of going to a good movie. The rest of the decision, however is left to the personal preferences between the ultimate result of performing each activity.
Anyways, I suppose by analysing my choices tonight, I realized that when the costs (opportunity costs) are only the respectively opposite activities, then the real cost that emerges is the present or enduring value of each activity, which would then be multiplied by the personal prefernces between each activity's results; according to the resulting ratio of products, a person would chose their actions in direct proportion to that ratio.
That's a nice little thought and microeconomic analysis to have on a Sunday evening.
:)