Final Reflection

It's hard to say how much I've learned during Writing 340. None of the subjects that were covered were completely "novel" to me, and I feel like I had a pretty strong grasp of the key writing topics from my first semester of writing. That being said, I felt like this semester of writing was more enjoyable simply because I was allowed to write about things that interest me. Research was far less painful, as reading about these topics was actually interesting as opposed to just time consuming.
I've learned that I'm more or less impartial to collaborative learning. The workshops were definitely helpful, and the worksheets were useful in leading us in the right direction and in getting us to think critically. In the past I had generally been against these types of workshops as I didn't really trust my classmates' advice or corrections, but this class provided a good environment and I trusted the opinions and input of everyone. I haven't been a huge fan of this blog assignment, however. I didn't really get much input, and my blog posts didn't really help guide my research. I had all my blog thoughts in my research notes, and posting them to a public forum seems like an unnecessary step. But as far as overall experience, Writing 340 did help me practice my writing and become more organized in my essay writing process.

Out of Control

One aspect of behavioral economics that I cover in my paper is self-control. I only had enough relevant points to cover it briefly, but it's really an interesting topic that many people don't really view as an 'economic' factor. However, it actually ties into hyperbolic discounting a lot--it's far easier for people to think they can control their future purchases than their current purchases. People value having consumer goods in the present rather than the future, so self control is likely to be far lower now than later.
There's another part of self control that I wasn't able to incorporate into my essay but that I find fascinating: ego depletion. This term basically explores the idea that self control is like a muscle that can be depleted. Ego depletion helps explain why dieters often cheat and/or binge eat at night; they've been exerting self control all day, so by nightfall they've completely exhausted their willpower and give in to their wants.

She'll regret this in the morning when her self control "muscle" is replenished

(http://www.diseaseproof.com/uploads/image/DP%20-%20the%20anatomy%20of%20a%20binge.jpg)

Many experiments have been done to test this theory. One involved having participants watch a comedy routine and try to use self control to prevent themselves from laughing, while another group did not undergo this exercise. When both groups were tested on another task involving self control, those who didn't have to control their laughter did more poorly than the other group. 

Of course, this doesn't mean that there is no hope for those with weaker self control "muscles"--like any other muscle, the self control muscle can be "toned" with proper "exercise." Exerting self control on a regular basis can actually improve one's ability to sustain self control for longer.

Sources:
Baumeister, R.F. "Ego Depletion: Is the Active Self a Limited Resource?" Journal of Personality and Social Psychology. 1998. 74: 1252-1265.

Progress Report: Halfway Point

At this point, I'm about halfway done writing this paper. I actually have a significant amount of information on savings/retirement savings, so I may not even need to include credit cards in my analysis. I might mention it briefly, simply because it is a really interesting aspect of economics and psychology.
Right now, I'm working on the "solutions" part of my essay--how behavioral economics (and not classical economics) can provide useful solutions to avoiding/getting out of this current savings mess. Economics professors and authors Dan Ariely and Richard Thaler have been crucial sources for this part. They both propose solutions that are both simple and obvious, making me wonder why they have not been implemented yet.
Most of Thaler's solutions revolved around the 401(k) plan and other retirement plans; since these plans are already out there, it makes sense to just alter these ones instead of creating an entirely new solution. He suggests ideas such as automatic enrollment and a simplification of the enrollment process, both of which have shown to drastically increase participation rates in isolated experiment.
Thaler's other idea is an entirely new plan, and he even coined it the "Save More Tomorrow" plan. This plan takes advantage of hyperbolic discounting (again, how people seem to value their time/money today rather than in the future), which makes it very tied to behavioral economics. In this plan, new employees decide what percentage of their future salary raises they would want to invest in retirement plans. This way, they aren't affected by today's salary, eliminating the effect of hyperbolic discounting. I'll definitely explore this idea as I continue to write my paper.

Topics to Explore

My research is well underway at this point, and I've come across some very interesting topics that I plan on incorporating into my overall essay on savings. One topic I'd like to include is credit cards. Credit cards have entirely changed the landscape of money in the past few decades, enabling people to spend well beyond their means. Here are some facts about savings and credit cards (taken from Dan Ariely's Predictably Irrational) from right before the economic crash:
Average American savings rate in 1994: 5%
Average American savings rate by 2006: below 0
Average European savings rate 2008: 25%
Average Japanese savings rate 2008: 50%
Average number of credit cards per family: 6
Average debt on credit cards per family: $9,000
Percentage of households that borrow on credit cards to cover basic living expenses: 70%

I'm hoping to be able to use these facts and apply them to a cohesive thesis about why behavioral economics is so crucial to understanding why Americans are terrible savers, and what this means for the future of the country.
Another example I'll use is retirement savings (focusing on the 401(k) and why people often opt out of it). By using retirement savings, I'll have a solid example with which I can explain savings from a more concrete perspective.
Lastly, I've started reading Ariely's newest book, The Upside of Irrationality. This book is far more psychological than economical, but I'm finding it super interesting (even if mildly irrelevant to my paper topic). Topics include the "IKEA effect" (where you get attached to items if you help build them yourself), why people seek revenge, ideas on beauty, and an analysis of online dating. Interesting, right?

Narrowing in on a topic

After presenting last Thursday on behavioral economics in general, with no real thesis besides "irrationality," I think I've finally gathered enough information to focus in on a real topic. Presenting was actually very helpful, as the class seemed involved and ready to help me with ideas. A lot of people liked the Tiger Woods/celebrity approach to irrationality (excess money = power trip, reckless behavior). Others said I should take one aspect of behavioral economics (framing, anchoring, hyperbolic discounting, etc) and explore just that. But the topic that I feel will be the most enlightening/beneficial/interesting is personal savings. If I use this topic as the base of my paper (perhaps focusing on how this played into the economic/housing crisis), I can branch off into many different aspects of behavioral economics. I can use hyperbolic discounting (which is, again, how people tend to regard present time as much more valuable than future time) from behavioral economics, promises/promise breaking from psychology, and facts and figures about savings/the economic crisis from economics. Also, savings will provide me with plenty of examples and experiments that are mildly related to the topic, so I doubt that I will run out of things to discuss.


Also:
Here is the video that I showed a clip of during my presentation. The full clip is very interesting, I just didn't have time to show it all during class.

New focus: irrationality

After researching behavioral economics for assignment #3, I've decided that the main focus of my essay will be on the idea of irrationality. Since there are so many instances of irrationality in the news (i.e, people doing things that are just plain dumb), it'll be easier to find ways to connect behavioral economics to topics that are relevant today. 
Also, irrationality is something that everybody is familiar with, to varying degrees. Often times, we don't even recognize that some decisions that we make are irrational. For instance, one of the topics I've been researching is called hyperbolic discounting. According to Wikipedia, "humans show a preference for one that arrives sooner rather than later. Humans are said to discount the value of the later reward, by a factor that increases with the length of the delay" ("Hyperbolic Discounting"). It's "hyperbolic" because the discounting factor eventually reaches an asymptote and levels out. Here's a graphical explanation, which may or may not be helpful ("Hyperbolic Discounting"): 

Hyperbolic discounting works for responsibilities/pains/tasks/etc as well, just reverse. People prolong doing difficult tasks because they feel that the value of their time at the moment is higher than in the future, or that the pain they feel in the future will be somehow less strong. 
While this topic has a very scientific and mathematical background (see: "Golden Eggs and Hyperbolic Discounting" by David Laibson), it also applies to everyday occurrences, making this topic relevant to our lives and important to understand.




Works Cited
"Hyperbolic Discounting ." Wikipedia. Wikimedia Foundation, Inc., 12 Jun 2011. Web. 6 Jul 2011.

Behavioral Economics: First Impressions

For this final paper, I'm going to explore the relationship between economics and psychology--in other words, behavioral economics. This field of research is relatively new (in the last 15 years or so, I believe), which should give me plenty of space to investigate the future and possible implications of the field.
I'm an economics major, so I'm pretty well-versed (I hope so) in that half of the exploration. Psychology is something that I've always been interested in, but I have never pursued it academically. I'm actually quite familiar with behavioral economics itself; a few summers ago I had an internship in which I did extensive research in the field, and I got to read most of the leading published works. I covered many topics (anchoring effect, advice presentation, choice architecture, self-control, etc) in depth, but didn't explore why these are important or how they could be influential in the future.
In this research paper, the why and how of behavioral economics will be my focal point. Using the background knowledge I already have (and, of course, more research to refresh my memory), I will analyze the relationship between economics and psychology, how it has converged into behavioral economics, and why this field of research is so crucial to modern society.

Artist vs. Audience

For this upcoming paper, I'm writing about Lady Gaga and how she has gained control over her audience in a world where the media constantly tries to bring down celebrities. I'll be focusing on her performance pieces (especially her performance of "Paparazzi" at the 2009 VMAs), as well as her novel use of social media (like Twitter and Facebook).
Since Lady Gaga is so current, it's especially interesting to see where she's coming from as well as where she's possibly headed--much of her "pop star appeal" is generated through brand new media and techniques, making her a very unique case study.

Testing blog

First post