look ma, school was useful today!

[aruan]

I learned something interesting at tonight's Microeconomics review. The labor demand curve bends backward, the only one to do so. It happens where the Substitution Effect, which is that people become more and more likely to give up free time to work more as their wages increase, ceases, and the Income Effect takes over, which dictates that above a certain income, people begin working less because they want to reclaim more free time as opposed to just continuing to make more money.

Economics treats free time as a normal good, which is defined as something that everyone wants the most of. The higher your income, the less you demand inferior goods (i.e. Kias) and the higher you want your normal-good levels to be. At some point, economics acknowledges, your free time becomes more important than working. Which is so cool, because it's true. And of course everyone is different, depending on how much money you want or how important your free time is or how much your definition of a normal good changes with your income, but it's real. That's the part that got me, that something I learned in a classroom (OK, a hotel conference room, because who has time for classes?) exists wholly in real life.

On that note, Mike came up to me later that night as I was putting together briefs, leaned his elbows on my cubicle's partition and said, "I want alcohol." I stopped typing, looked away from the screen and up at him, and said, "Yes." Like a little revelation. Working across the street from a liquor store comes in handy, and we returned with two cases of beer for the office.

I don't remember much of the rest of it, but fun is an adequate term. I'm gonna miss this place so hard.

Comments

[science-vixen.livejournal.com]

Uh? I never accepted this in Economics, because it doesn't explain workaholics and volunteer work. The model is too simple as a 2D graph, and needs an extra dimension of social/emotional reward: How good does it make you feel.

[gjstruthseeker.livejournal.com]

I know what you mean, but I touched on that a bit with qualifying that free time is more valuable to different people. The curve isn't static, though it was drawn pretty symmetrically for us. But there are people who only want money for whatever reason and frown on leisure time (i.e. my father), there are those of us like myself who has a reasonable threshhold between where my time becomes more valuable than my money (or really, just the time I spend at work, as I get paid plenty for what I need at the moment - rent, food, gas). And then there are people who don't care about money at all, who are fine living in public housing never owning anything new and devoting all their time to their normal good of volunteering.

Your proposition of a third dimension is intriguing, but I'm not sure it's necessary. Economics deals in money, sure, but this particular example is interesting because it does factor in the human element of emotion. Work is defined as the time you give up in order to make money. This, of course, presupposes an economic system that operates on money and a base demand for it, probably defined by the average cost of living in an area. But you're right, there are the people who get pleasure from their work entirely and couldn't care how high you piled the money - they'd still work the same.

But is that really something any graph of a generalized concept could account for? It's like either end of the intelligence bell curve, with geniuses who can't remember to put on a coat before going out in the rain or the legally retarded who can solve unproven mathematical concepts - they kind of defy every attempt at classification. How rare (and lucky) are those who live happily in the Substitution Effect?

[science-vixen.livejournal.com]

That's just looking at extremes, and the trouble with extremes is that they are well... extreme.

If we take it a step closer to home, it is more of a line. Take your position at the Aligator. Say they offered you a 'better' position, it would mean more prestige (in this case interchangeable for money), but also more of a headache. Say it actuaslly meant less hours, but a high responsibility, with less (or no) control of the quality and/or quantitity of stories that are published. Nominally you're the editor in chief, and your name appears on the paper, technically anything that happens is your fault, and practically you have no way of control, would you take the job? I mean, it does give more free time, and a higher money-equivalency.

Emotion-quotient is important. It even expresses politics through it's effect on dedication and morale.
Another example:
Consider the soldier who dies for his country. He's paying a high price. He's giving up way more than his free time. Yet I'm sure that his pay is abismal.
Yet patriotism, gallantry and such can be plotted against the line of emotion-quotient.

Now don't ask me to draw the graph. I don't think you can realistically define values for emotion. But In this I like to quote einstein:
"It would be possible to describe everything scientifically, but it would make no sense; it would be without meaning, as if you described a Beethoven symphony as a variation of wave pressure."

[gjstruthseeker.livejournal.com]

Taking my promotion to managing editor would've been by and large a mistake (from the perspective of my personal happiness) if my job were what it should've been, instead of Freelance Editor/Night Editor/whatever else was required on any given night. Taking me out of the newsroom isn't something I'll ever take again, not so long as I care about how news is reported. Also, I'd already reached the Income Effect part of my labor demand curve before I was promoted - I took the job because it was less work on a daily basis but more overall responsibility, which is what the paper needed for me to do. Which sounds all martyr-like, but I would've liked to keep my job as Metro Editor, but the normal good of the quality of the paper, which comprised my life, became my Income Effect motivation, not the extra money I'd be making.

Not sure if all that made sense. I think my point was that there is no definition for a normal good when it comes to someone who derives satisfaction from his or her job on the level equal to free time for others.

However, I would take that job if my free time became suddenly more important. Like right now, I'm neck-deep in Stargate Atlantis. I want to spend my time reading discussions and fic and participating in fandom again, something I haven't really felt in a while. So the journalism thing has, for the moment, waned a little in my totem of normal goods.

But patriotism etc. go into raising service (work) to a normal good. So a soldier is again off the chart because his labor demand curve doesn't even really bend because it's not affected by money. Like his demand for the normal good of service is inelastic - he'll obtain it at any price. Instead of a labor demand curve, it becomes a simpler supply/demand curve.

[science-vixen.livejournal.com]

hmm, I hadn't thought about it like that.

I understandf your point about things being of the curve , and see why it would be nearly impossible to neatly plot such a curve in the first place, even though it's effects have severe implecations on the 2D curve (sometimes even going as far as negating it). Perhaps it's all for the better that I never studies economics beyond highschool. I don't think both of us (econimics and me) would survive the head-on collision.