Think Economically

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Maximum understanding, minimum average total cost.

Training your elephant: how to make yourself do what you already promised yourself you would do.

Some of my students have asked me for advice on how to achieve, and as someone who almost failed out of college, then went on to finish a Ph.D., I suppose I’m in a position to provide some advice on the matter. I tried to boil it down for one of them, and the three most important things that I came to were:

  1. Making active decisions about how you spend your time.
  2. Setting long-term goals.
  3. Driving your discount rate down.
These are really important to me. I still feel like the person who almost ruined his life, and I think of the disciplined exercise of these as a bulwark against the loss of everything I hold dear. It’s been a decade since I really behaved badly, but it’s an ever-present fear.

 

The third one is the least straight-forward, and the first one is the hardest to do in practice, and I was thinking about what stands in the way. Time inconsistency of preferences is closely related to the interface between spending time wisely and your discount rate, and it can throw the whole thing off, though, and so I wanted to talk a little about it.

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