Here’s the truth. I may know a bit about economics, but when it comes to my personal life, I’m not a very good homoeconomicus. I dither, I procrastinate and sometimes I don’t do what I know is good for me, not even things I know would make me happy.
One of the things that has always fascinated me about economics is that, at its heart, it’s about how to make decisions that maximise your “utility”, ie. happiness. What could be more important than that?
Homoeconomics – the perfectly rational human – may not exist in real life. But knowing how homoeconomics would act in a certain situation can help you to make choices between competing options. It’s about asking yourself a set of questions: how much happiness would I derive from option A and how much from option B? What is the cost of Option A and B? What would I give up, by choosing option A or B ie, what is my “opportunity cost”? Once you’ve answered those questions, you should be able to make a decision which will optimise your utility. In theory at least.
In practice, we are constantly juggling a set of competing and conflicting desires. I want to watch television, but I don’t want to get fat. I want to eat this bucket of Haagan Daas double choc ice cream, but I also want to look like Miranda Kerr – even, probably, Miranda Kerr just after she’s given birth. In reality, we’re a seething pit of conflicting emotions, wants and desires. Sometimes knowing what will make us happy just isn’t that easy.
And so every year I try to make a new year’s resolution. It’s essentially a pre-commitment device. I figure out something I know I should do and then tell as many people as possible to try and guilt myself into doing it.
This year I used a column in the Herald to pre-commit to doing one minute of exercise for every dollar that I spend. How’s it going? Well, it’s interesting. So far it has been a useful discipline to keep a record of everything I’m spending – I had no idea I was spending that much. As for exercise, it comes and goes. As we approach the end of January, I am already about 30 hours in exercise deficit. But all is not lost. I find this all quite motivational. Like a game I have to beat by doing lots of exercise.
I thought this blog might be a good way to add an extra layer of accountability. So I’ll keep you posted.