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Sunday, September 13, 2009

Sometimes I wish I could NOT think like an economist

I've been waffling about joining the gym at school - I used to belong, let my membership lapse when I went on sabbatical, and haven't re-started it, though I am incredibly out of shape. I keep saying, "I really need to get back in shape" so recently a friend asked, "Why don't you just bite the bullet and join the gym? Then you'll have extra motivation to go since you'll already be paying for it." I laughed and explained that unfortunately, this is one of those times when I think too much like an economist - most people would think as my friend does, that paying the monthly fee would give me an additional incentive to go, but as an economist, I think about the fact that once I've paid the monthly membership fee, it's a sunk cost. Whether I actually go use the gym or not, the fee will be charged to my credit card, so simply paying the fee will have no impact on my decision to go to the gym on any given day. The marginal cost of going to the gym on a particular day is still only the energy I'll have to expend that day. Knowing this, the decision to join the gym in the first place depends only on whether I really believe I'll use it; it doesn't create any additional incentive to actually go (admittedly, joining reduces the marginal cost of going, relative to if I didn't have a membership, since if I go without a membership, I pay a day-use fee; however, the main reason I don't go is because I'm basically lazy so that doesn't help much).

Of course, following this logic, if I really wanted to get my butt to the gym, I could set up some sort of commitment mechanism that does change the marginal cost or marginal benefit of going on a regular basis. For example, I could give some money to my friend and tell him to only give it back to me if I actually go to the gym at least three times a week this month. I guess the fact that I'm hesitant to do this is an indication of just how lazy I really am...

1 comment:

  1. Gee, did you hit the nail on the head :-) I wager most people think this way also, but are less aware of it. The money is already gone...

    Is there a way of looking at a different economy here? Investing (time and energy)in your health now for quality of life returns later? Actually, you'll feel some benefits immediately, and others will grow over time.

    I'm afraid I'm a bit ignorant of economic theory, but I'm pretty sure you're not lazy. You can find a way to make this appealing :-)

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