Think Economically


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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How do people decide what they like? Atlanta commute with and without train tracks and decision under risk and uncertainty.

So I’m trying to put something together here with some coauthors and I thought it might be useful to put down some really back-of-the-envelope thoughts to see if I can get some of this articulated, as well as any comments or criticisms anybody might like to offer.

The question I/we are grappling with is this: how do people decide what they like?

The anecdote that got me interested in this particular question is this: when I lived in Atlanta, I would regularly (2x a week) have to drive from my friends’ house in Clarkston, where my daughter would stay for the day, to the train station at Edgewood/Candler Park. There are two routes between the two locations (clearly there are more, but let’s say there are two routes). One of the routes is shorter but has a set of train tracks across it. The other is longer, but manages to circumvent the train tracks by going under a railway bridge. Read the rest of this entry »

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