|
06-06-2010, 05:52 PM
|
#1
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
|
Dear Economist
For the economic junkies among us, here's an entertaining blog by Tim Harford, who uses economic principles to address everyday questions:
Tim Harford — Dear Economist
I am ROFL over the February 6th entry, about the little girl who has figured out how to buy forbidden sweets (candy)...
Dear Economist,
When my daughter reached the age of six, my wife and I decided to give her a small amount of pocket money. However, access to money of her own would allow her to buy herself large quantities of sweeties. So instead of giving her cash in hand we keep track of the money she’s accumulated, which she can then use to purchase anything she wants so long as it’s not food or drink.
This worked well, but for her eighth birthday a number of kind friends and relatives gave her cash. She now plans to keep this money as an ongoing sweeties budget while buying birthday presents from her saved pocket money to show her benefactors.
Short of confiscating her birthday money, is there any way we can hope to discourage this?
Outmanoeuvred parent
Dear Outmanoeuvred,
Your daughter has discovered that money is fungible. As they say in the aid industry, you may think your grant is funding your favourite project, but it’s really funding the president’s favourite project. Thus, you give money on condition that it is spent on an extra hospital, the recipient builds the hospital he was planning to build anyway, sends you the receipts and increases his expenditure on limousines and AK-47s. (Did he spend your money on the hospital or the limousines? The question is meaningless, and that’s fungibility.)
Your plan worked only while your daughter had no access to outside sources of funding.
I can see three options. You rule out confiscation. The second is to offer incentives for low sweet consumption by increasing or reducing your daughter’s pocket money. The trouble is that sweet consumption may be hard to monitor. The third is to admit defeat and let your daughter make her own choices. Sweets have costs and benefits, and your daughter appears to be a better economist than you are.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
06-06-2010, 06:11 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
|
Lovely blog.
I particularly enjoyed this question.
Quote:
Dear Economist,
My partner and I are ready to register for gifts and we are seeking the most efficient way to do it. Most registries allow any gift to be returned to the store for cash. Additionally, one can often find 20 per cent coupons for this store (meaning that one can return a gift worth $100 and then buy it back with a coupon for $80). Which gifts should we register for? I am worried that if we register for lower-priced gifts, then people who have a higher willingness to pay will take advantage of the consumer surplus and buy a cheaper gift. Or should we just register for the gifts we want because the opportunity cost spent returning gifts and buying new items will be too high?
Meir, New York
|
|
|
|
06-07-2010, 10:00 AM
|
#3
|
Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
|
Quote:
Originally Posted by Meadbh
your daughter appears to be a better economist than you are.
|
Looks like she's doing a better money-management job than they expected...
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
|
|
|
06-07-2010, 12:56 PM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Jul 2003
Location: Pasadena CA
Posts: 3,346
|
Quote:
Originally Posted by Nords
Looks like she's doing a better money-management job than they expected...
|
Looks like their primary objective has been accomplished. Time to declare victory and go home.
__________________
T.S. Eliot:
Old men ought to be explorers
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|