Discover Your Inner Economist
Tyler Cowen is an economist who believes that understanding the incentive that will motivate each individual is key to everyday success. From getting children to wash the dishes to having a productive business meeting or choosing the best restaurant, Cowen highlights how recognising that money is not always the motivating force will deliver better results in every aspect of your life.
With a light-hearted and engaging tone, Discover Your Inner Economist aims to make your life easier and happier by encouraging you to think about familiar problems from different angles. And by understanding the fundamental economic insight that not everything can be bought with money – and that incentives such as a smile or praise can work wonders – you are on the right track.
Cowen believes a clearly expressed economic observation should make complete sense and really matter to us personally – generating an ‗aha‘ moment. He wants his book to uncover more of those moments so that we liberate and strengthen our own inner economist. Over the course of 10 chapters, the book covers a diverse range of ideas, from how to save the world, how to eat well or how to view art in a gallery. In ways to improve our approach to business, Cowen offers up several different ideas:
Sometimes offering money is counterproductive— especially when it undermines motivation. In research, people usually do just as well with a range of tasks – or even better – if there is no money on the line. Recognition and respect is usually the best motivator – students praised for keeping their college clean and tidy keep their environment much cleaner than those who are just lectured about their duty. Bonuses at work should not be offered unless there is a good measure of success – many workers feel bonuses are used to reward favourites rather than being judged on results. Hospitals are also reluctant to give doctors bonuses for high success rates with heart surgery because it might make them reluctant to take on difficult cases. But Cowen does believe that we should use money to motivate when effort matters, if there is little intrinsic desire to do the job, and when money boosts the recipient‘s social status.
How to deal with meetings
Cowen believes improving the quality of meetings is extremely difficult. Rambling, redundant and digressive talk are seen as the main problems. One survey found that managers spend one quarter of their time in meetings. Cowen shares some ideas for cutting out timewasting: make everyone stand up until the meeting has finished; hold the meeting over the phone even if everyone is in the same building; give participants a clock to limit the number of minutes they can speak; monitor people‘s emotions during the meeting so that an alarm measuring vital signs will beep to show when anyone is bored; and put a price on every person‘s time at the meeting to see if it has delivered the equivalent value. But as Cowen points out, meetings are there for many reasons – such as gaining buy-in or reinforcing status – so cutting them out entirely is difficult. However, if you have far fewer meetings, and ask for written comments on plans instead, time may be saved.
Cowen‘s view on brainstorming sessions is that they are counter-productive: people usually think of more new ideas on their own. One study found that people were less productive in groups in eighteen out of twenty-two situations, and the larger the group, the greater the loss of productivity. But we still tend to think highly of group discussions, possibly because it makes us feel part of a winning team, even if others have come up with the ideas.
Getting people to arrive on time
An interesting example Cowen gives is a day care centre that was having problems with late-arriving parents, causing inconvenience and extra cost. The manager decided to impose a fine on the tardy parents. However, after the new fine was instituted, more parents were late. When the cost of lateness went from social disapproval to a pre-planned monetary amount, people decided it was worth that cost and used the system more.
In Cowen‘s last chapter about the future of civilisation he highlights one simple but powerful idea: help other people by first helping yourself and fulfilling your own potential. Society depends on us all using our own inner economist.
About the author
Tyler Cowen is an American economist, academic, and writer. He is a professor at George Mason University and is co-author of the highly popular economics blog MarginalRevolution.com. Cowen gained his PHD in economics from Harvard University and writes for the New York Times, the Wall Street Journal, Forbes and Newsweek. In 2011 he received a nomination as one of Economist magazine‘s most influential economists in the last decade. Cowen was ranked 72nd among the “Top 100 Global Thinkers” in 2011 by Foreign Policy Magazine, “for finding markets in everything”.
Fast, furious, and fun, with great examples of how to apply economic thinking to nontraditional subjects. – Stephen J. Dubner, coauthor of Freakonomics
Engaging and useful. – The Washington Post
Author: Tyler Cowen