January 16, 2008

Interesting and Applicable

Author Tyler Cowen presents many ideas within the first few chapters of his book, Discover Your Inner Economist. One idea that struck me at the outset of reading was the "postcard test." Cowen suggests that the best economic ideas and principles are the ones that are easily explained to everyone. An economist should be able to clearly and concisely present his or her ideas on one standard sized postcard. If they are not able to do so, it is probably an idea that still needs a little more thought and analysis. According to Cowen, economic ideas should be easy for anyone to understand, including your grandmother. If this is the case I know that I have some work to do in my own understanding, before I can easily explain any ideas or concepts to others.

The concepts and ideas that are presented in the first five chapters of Discover Your Inner Economist, are not difficult for nearly any reader to understand. One area that Cowen looked briefly at relates to efficiency at work. By having meetings, businesses are able to gather thoughts and expel information to a large population of employees. Though this seems like a good idea on the surface it can quickly become non-productive and an inefficient use of time. Many people experience this in their own jobs on a fairly regular basis. I have often found that not much is accomplished at the meetings that are run at the store that I manage. Although there are many issues on our weekly agenda, we never seem to have time to finish them all. Cowen suggests several different tactics in order to increase the effectiveness of such meetings. Some of his suggestions that I found that might be applicable to our meetings would be having all of the employees stand, or to time the comments that each individual makes so that no one person talks more than their fair share of time. There is a certain amount of absurdity with using any of these suggestions, but it would be interesting to see if they gained results.

Another idea that was clearly expressed and deserves some attention is Cowen's thoughts on rewards and penalties. Many people, myself included, will not work towards a goal if there is not some sort of incentive. We are not often willing to just do something that merely fills our time. There are two basic types of rewards that we can receive and the first is a monetary reward. I would not be willing to spend any number of hours at the bridal shop managing if there was no pay, so monetary rewards are often used in order to compensate me and others for our efforts. We can see monetary rewards used to encourage work or certain behaviors, and sometimes even to deter certain behaviors. Another type of reward/incentive is one that yields internal motivation. When workers do a good job it is not always best to reward with money. Some of the strongest incentives may come from verbal affirmation. When to use the right incentive is generally the most difficult part to determine, but for the economist inside many of us, it may just come naturally with experience.

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