Making big life decisions and thinking like an economist

Lifestyle

September 25, 2022

I share a lot about my college life on this blog, but I’m not if I’ve ever shared that I’m an econ major (actually maybe I have?) Not that it’s a bit deal or anything. But, this week I thought I’d write about a big life decision that I made recently and I realized that the way I approached this decision was in an economically-minded way. And by economically-minded I do not mean money-oriented, but instead I mean in a way that fully weighed up the costs and benefits and the opportunity costs and sunk costs. Kind of quirky of me to let my major take over my way of thinking? But I thought that this mindset provided a good framework for thinking about decisions logically. Maybe this will be the kind of blog post that doesn’t make sense to anyone who has not studied these concepts, but I hope that I do a good job of explaining my decision and these factors!

This past summer I applied for internships which will hopefully turn into full time jobs after graduation, and had to make the decision of which offices to apply to. For me this was a big decision because this is basically like setting my preference for where I want to live and set up my life after college. I was initially very torn about whether I wanted to apply to offices in the UK and move back there or to offices in the US and put down roots here. I ended up deciding to apply and took an offer for an opportunity here in Washington DC, but I want to walk through how I made that decision.

Economics, when you think about it high-level, is about making decisions. It’s about making an educated decision by weighing up the costs and benefits and quantifying things in a way that allows you to conduct an analysis. This may sounds like a process that takes the soul out of a decision, however, economics is also about quantifying those unquantifiable things and factoring them into the analysis.

So when I approached this big decision of where to apply and decide to put down roots, I obviously thought about it like any nerdy econ major would. I decided to think about all of the costs and benefits and conduct some kind of analysis in my head. I don’t mean to say that I used any graphs or equations, but this general framework of quantifying the intangible and analyzing it was what I did.

I started thinking about the costs and benefits of putting down roots in the US. Things like the variety of opportunities here, the opportunities for post-grad education, my college friends who would be here after graduation, the things I enjoy about life here! But I also got thinking about the loneliness of putting down roots when I have no extended family here and some of the things I don’t love about the US too. There were a lot of small things that really got me thinking about my life well into the future. I feel like a lot of people say that you don’t need to worry about those small things right now, but I feel as though as an expat I’m really making an investment into my life in one place or the other so these were things I thought were important to consider!

I also got to thinking about opportunity costs. An opportunity cost is the loss of a potential gain when you choose to do something else. It’s the cost of the opportunity that you’re losing by doing something else. I thought this was very applicable to this decision as by deciding to put down roots in the US I had to consider the opportunity cost of seeing the rest of my extended family and home community grow closer and go through experiences that I wouldn’t necessarily be able to experience. But on the other hand, if I chose not to stay in the US, I had to think about the opportunity costs of the experiences I would miss out on here and the life I want to experience with my friends after I graduate from college.

I also got to thinking about another type of economic cost, the sunk cost. A sunk cost is something that’s already been incurred and can’t be recovered. The main idea is that this cost can’t be recovered, so you should make the decision as if that cost doesn’t exist. I was thinking about this a lot when it came to thinking about my cultural identity. A few blog posts ago, I wrote about this feeling that I’m torn between being from England but also being from Dubai and also kind of being from the US now – they all make up my identity. There’s this feeling of when I’m in those places that I’m not “enough” of those identities to be fully accepted as any of them, and that was something that I thought of in terms of sunk costs. I’ve already “invested” a portion of my cultural identity or makeup into each of these places and that’s a change in myself that can’t be “recovered” or “reversed.” Therefore, I should make my decision about where to put down roots, not based on where I feel like I put the most effort into making a part of my identity, but based on other factors that are important to me.

This decision also got me thinking a lot about how volatile my emotions surrounding this are – yet another economic concept that fits perfectly here. Some days I feel very proudly British, other days I feel like I identify with the Arab culture, and on other days I can’t wait to build up a life in the US. My emotions change a lot based on the day and what I’m going through. If I’m watching an episode of Downton Abbey or Harry Potter I find myself feeling extremely British and really missing it – that’s how volatile my emotions are! I think just like in analyzing data, recognizing that these emotions are volatile but trying to extract a larger trend is what I should focus on.

There you go, a bit of econ nerd talk for you! Maybe that sounded like a load of rubbish, but I hope I at least sort of succeeded in explaining my process and framework for making these decisions. Do you find yourself thinking in any of these frameworks? Let me know in the comments!

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