The Silent Economist

Tag: unlimited wants

  • Why we have to make choices?

    Every day, every one of us has to make choices. They can be big choices or small choices.

    Why did you decide to read this blog today? There are many other things that you could have chosen to do instead.

    You make about 35,000 choices a day and the majority you don’t even give a second thought to.

    Let’s revisit the last post, there are only 24 hours in a day. We cannot make an extra hour of time.

    So how are you going to spend your 24 hours?

    For the average person a normal working day would be broken down something like this:

    ActivityTypical Time
    Sleeping8 hours 0 minutes
    Working (paid work)7 hours 30 minutes
    Commuting45 minutes
    Eating & drinking1 hour 30 minutes
    Personal care (washing, dressing, etc.)1 hour 0 minutes
    Household tasks (cleaning, cooking, shopping)1 hour 30 minutes
    Leisure (TV, hobbies, social media, reading)2 hours 30 minutes
    Exercise & sport30 minutes
    Socializing/family time45 minutes

    As soon as you choose to do more of one thing, you have less time to do another.

    Your time is limited to 24 hours, so an extra 30 minutes on social media each day, will mean 30 minutes on other activities.

    For some they might choose not to exercise at all, for others they might cut down on something else.

    What would you choose to cut back on?

    In the US the median household income was $87,460.

    They spend their income in roughly these proportions:

    Spending Category% of IncomeAmount (based on $87,460 income)
    Housing34%$29,700
    Transportation16%$14,000
    Food12%$10,500
    Insurance & Pensions13%$11,400
    Healthcare8%$7,000
    Entertainment5%$4,400
    Clothing3%$2,600
    Education2%$1,750
    Miscellaneous7%$6,100

    If they have to spend more on one item then they will have to spend less on another item. If the cost of gas rises they will have to choose to cut their spending elsewhere.

    How would you cope with rising gas prices?

  • What is Economics? – 3 – Choice

    These are the typical definitions that students will find in Economics textbooks.

    •the coordination process

    •the effects of scarcity

    •the economy

    •the science of choice

    •human behaviour

    •human beings as to how they coordinate wants and desires, given the decision-making mechanisms, social customs, and political realities of society.

    In my opinion the most important one there is the science of choice. Do to the fact that our wants are unlimited and our resources are limited, we are always having to makes choices about what we do with our limited time or money.

    Each of these decisions will have some kind of trade off and economists can help us to make better ones.

    There are only 24 hours a day, on average a person will sleep 8 of those. If they make a choice to sleep less they will have more time to do waking activities! Missing an hour or two of sleep every now and again will have little long term impact on us but do it repeatedly over the long term, leads to some negative effects.

    If you were to reduce your hours of sleep over the longer terms to say 5 hours per night, studies suggest that an individual is at

    • Substantially higher risk of cardiovascular disease
    • Increased risk of obesity and diabetes
    • Weakened immune function
    • Higher rates of anxiety and depression
    • Poorer memory and learning ability
    • Increased risk of accidents due to slower reactions

    So that additional 3 hours of being awake to pay video games or to earn additional income comes at a cost. If he have good information we can make good choices. If we don’t have good information or only partial information, we may not be making the best choice for ourselves.

    What is it for you? 8 hours or 5 hours of sleep?