Well, I've graduated from an honours in economics class... finally
This year has been a particularly difficult year for me emotionally
And as the year comes to a close, I wonder...
Have I made a really big mistake?
And so my life goes on
But it's not the same as before
Now that it's over
It's hard to see what else is in store
Oh Maxie, you're just so silly.
Tuesday, December 29, 2009
Monday, February 16, 2009
The hyperbolic discount function
Sounds terrifying, but after reading Utset (2006), it's heaps easier than I think. Reading about this by an economist instead of a lawyer would probably be more terrifying. After writing a paper on the economics of procrastination based on O'Donoghue and Rabin, I finally understand what the hyperbolic discount function is, thanks to Utset.
What it is: economists in general have always assumed that individuals have time-consistent preferences. Basically, what this means is that your long-term preferences e.g. losing weight will be reflected by your short-term preferences e.g. you will take steps to lose weight. In reality, we all know that (i) this assumption is too ridiculously simple (ii) this assumption is unreal. Time-consistent preferences are captured by the exponential discount function, whereby an individual discounts his utility by the same magnitude as time goes on.
Individuals are in fact time-inconsistent in their decisions. I may have a long-term preference to lose weight, but then in the short-term, when it comes to deciding whether or not to eat that bar of Kit Kat, my desire for immediate short-term gratification can override my long-term desire to lose weight. In other words, I give extra weight to the costs and benefits of an action now than later. Such a time-inconsistent behaviour can be modelled by a hyperbolic discount function. The difference between this and the exponential one is that the hyperbolic one further discounts my utility now and in the future by some positive percentage. I won't go into this mathematically, but what this means practically is that in the immediate short-term, I can ignore my long-term preference in favour of my desires now - for example, if you ask me if I would eat the Kit Kat on Jan 1, 2009 on Jan 1, 2009, I'd say YES! But if you were to ask me about if I would eat the same bar of Kit Kat on Jan 1, 2010 on Jan 1, 2009, I'd most probably say I'd skip eating it. So it's quite easy to see time-inconsistency modelled in hyperbolic discount functions.
Voila! It's that simple. And it took so long just to understand it -_- Evidently I'm not strong at mathematics, but I'll be taking quite a big leap in doing a thesis around a topic so full of it.
What it is: economists in general have always assumed that individuals have time-consistent preferences. Basically, what this means is that your long-term preferences e.g. losing weight will be reflected by your short-term preferences e.g. you will take steps to lose weight. In reality, we all know that (i) this assumption is too ridiculously simple (ii) this assumption is unreal. Time-consistent preferences are captured by the exponential discount function, whereby an individual discounts his utility by the same magnitude as time goes on.
Individuals are in fact time-inconsistent in their decisions. I may have a long-term preference to lose weight, but then in the short-term, when it comes to deciding whether or not to eat that bar of Kit Kat, my desire for immediate short-term gratification can override my long-term desire to lose weight. In other words, I give extra weight to the costs and benefits of an action now than later. Such a time-inconsistent behaviour can be modelled by a hyperbolic discount function. The difference between this and the exponential one is that the hyperbolic one further discounts my utility now and in the future by some positive percentage. I won't go into this mathematically, but what this means practically is that in the immediate short-term, I can ignore my long-term preference in favour of my desires now - for example, if you ask me if I would eat the Kit Kat on Jan 1, 2009 on Jan 1, 2009, I'd say YES! But if you were to ask me about if I would eat the same bar of Kit Kat on Jan 1, 2010 on Jan 1, 2009, I'd most probably say I'd skip eating it. So it's quite easy to see time-inconsistency modelled in hyperbolic discount functions.
Voila! It's that simple. And it took so long just to understand it -_- Evidently I'm not strong at mathematics, but I'll be taking quite a big leap in doing a thesis around a topic so full of it.
When I'm at home alone
So this is what I've been doing when I'm home alone:
- Work - if I'm not doing it, then it's a bit worrying because there's heaps to do
- Reading stuff for my thesis. I have finally begun to narrow down my extensive research topic. Can't say too much, but will be utilising utility functions and hyperbolic discount functions. Utset is someone I'll be using quite a fair bit in the research - simple in his presentation of economics, especially as he's a lawyer. He's got free papers at the Social Science Research Network, SSRN, available free online to anybody.
- Playing the piano. I can't help but notice the short sequences I compose are always depressing. It's either an expression of my depression, or what causes my depression (that's a topic in econometrics, or statistics for economics, known as Granger causality - testing whether causality runs from x to y or vice versa). But admittedly, I tend to prefer composing more depressing sequences - it's the kind of sound that sounds... depressingly nice. I don't think I'm depressed, just almost horribly bored and tired and feeling like death is more imminent than it seems. Just a phase, hopefully.
Next post is an economics-based one :-)
- Work - if I'm not doing it, then it's a bit worrying because there's heaps to do
- Reading stuff for my thesis. I have finally begun to narrow down my extensive research topic. Can't say too much, but will be utilising utility functions and hyperbolic discount functions. Utset is someone I'll be using quite a fair bit in the research - simple in his presentation of economics, especially as he's a lawyer. He's got free papers at the Social Science Research Network, SSRN, available free online to anybody.
- Playing the piano. I can't help but notice the short sequences I compose are always depressing. It's either an expression of my depression, or what causes my depression (that's a topic in econometrics, or statistics for economics, known as Granger causality - testing whether causality runs from x to y or vice versa). But admittedly, I tend to prefer composing more depressing sequences - it's the kind of sound that sounds... depressingly nice. I don't think I'm depressed, just almost horribly bored and tired and feeling like death is more imminent than it seems. Just a phase, hopefully.
Next post is an economics-based one :-)
Thursday, February 12, 2009
A series of unfortunate tuna
I've been getting skinnier and weaker each day, and I haven't been eating less.
Reasons I think why this is happening:
- Work almost everyday. This generally involves running to get my professor's coffee, walking back and forth through the hallway to deliver stuff between him and his colleague, and carrying stuff to and from his car, apart from reading through his materials and searching for other information he needs
- Stress of the house move
- Stress of the thing that's been on my head for months now
- Occasional loss of appetite and diarhoeea - I think it's a combination of both emotional and physical factors
- Fatigue from not enough sleep
- Having not so pleasant dreams at night
...or really, it could be due ENTIRELY to the fact that I eat a tuna sandwich almost every single day of the week!!!
Professor, I'm getting sick of tuna...
Tuesday, February 10, 2009
I think this blog will eventually phase out as an economics blog
I am currently writing this entry from my professor's office while he's away doing some other stuff.
I am in desperate need of not being me for the moment - there is one particular thing that is on my mind that kills me whenever I think about it, and I can do nothing about it.
On a separate note, I'm going to soon run out of Calvinists to talk to, which is a problem because I've done a lot of my learning from them.
- A good friend of mine who first introduced that doctrine to me - I have a feeling he's going through something so it's a bit difficult to talk to him as he isn't as active online as he was before
- A friend of his is in another service. We don't see each other much precisely because of the differences in service times, and people might find our sudden friendship across services awkward
- Another friend of his is in another country. While I'm helping him to edit some stuff, we don't know each other well enough to carry on a conversation. We might get to that point one day, just not at the moment
- My beloved housemate, while she definitely holds more towards Calvinistic than Arminian soteriology is still learning, like myself
- A new found friend of ours who actually is not hostile to the soteriology which we hold to is just starting to learn more, and naturally I can't learn from him
- My beloved op513, while they are great people, I do not know them well enough. I don't chat to any of them on msn nor write to them, with the exception of the team leader which I update for the purposes of accountability. But I'm not very close to any of them
- A friend of mine who is going through some leadership issues has a girlfriend and so it's difficult to get time with him to learn
- Oh, and virtually everyone else near to me is either closer to Arminianism, completely ignorant of the doctrines to which they either implicitly or explicitly hold to, or are more Calvinist but have no time to teach me...
- There are a great number of teachers online, but I do need someone to look up to
It is just DIFFICULT. The next big question is this: where are all the female Calvinists!?
I am in desperate need of not being me for the moment - there is one particular thing that is on my mind that kills me whenever I think about it, and I can do nothing about it.
On a separate note, I'm going to soon run out of Calvinists to talk to, which is a problem because I've done a lot of my learning from them.
- A good friend of mine who first introduced that doctrine to me - I have a feeling he's going through something so it's a bit difficult to talk to him as he isn't as active online as he was before
- A friend of his is in another service. We don't see each other much precisely because of the differences in service times, and people might find our sudden friendship across services awkward
- Another friend of his is in another country. While I'm helping him to edit some stuff, we don't know each other well enough to carry on a conversation. We might get to that point one day, just not at the moment
- My beloved housemate, while she definitely holds more towards Calvinistic than Arminian soteriology is still learning, like myself
- A new found friend of ours who actually is not hostile to the soteriology which we hold to is just starting to learn more, and naturally I can't learn from him
- My beloved op513, while they are great people, I do not know them well enough. I don't chat to any of them on msn nor write to them, with the exception of the team leader which I update for the purposes of accountability. But I'm not very close to any of them
- A friend of mine who is going through some leadership issues has a girlfriend and so it's difficult to get time with him to learn
- Oh, and virtually everyone else near to me is either closer to Arminianism, completely ignorant of the doctrines to which they either implicitly or explicitly hold to, or are more Calvinist but have no time to teach me...
- There are a great number of teachers online, but I do need someone to look up to
It is just DIFFICULT. The next big question is this: where are all the female Calvinists!?
Wednesday, September 24, 2008
An ARBITRARY post: Library reminder
So I got this in my inbox - and I am posting this up as an arbitrary post so that I am updating my blog!
REQUEST NOW AVAILABLE.
The material you requested
is now available for collection
from the listed location. It will
be kept for you for 7 days
from the date on this notice.
AUTHOR: Osborne, Martin J.
TITLE: An introduction to game theory
CALL NO: QA269 .O78 2004
BARCODE: xxxxxxxxxxxxxxxxx
LOCATION: xxxxxxxxxxxxxxxxx
PICKUP AT: xxxxxxxxxxxxxxxxxxxx
Martin Osborne baby!!! Yeah baby yeah! A famous game theorist.
REQUEST NOW AVAILABLE.
The material you requested
is now available for collection
from the listed location. It will
be kept for you for 7 days
from the date on this notice.
AUTHOR: Osborne, Martin J.
TITLE: An introduction to game theory
CALL NO: QA269 .O78 2004
BARCODE: xxxxxxxxxxxxxxxxx
LOCATION: xxxxxxxxxxxxxxxxx
PICKUP AT: xxxxxxxxxxxxxxxxxxxx
Martin Osborne baby!!! Yeah baby yeah! A famous game theorist.
Tuesday, September 2, 2008
Why I am Single: An Economic Explanation
The theory and empirical work around human behaviour is generally in the realm of microeconomics (macroeconomics is the aggregation of microeconomics). And so this is the post on microeconomics which I said I would post in the previous post I posted.
Currently, I am in my final year of my undergraduate economics degree, and it is getting increasingly stressful. If I were to be asked why I am not in a relationship, if I want to be in a relationship, or when I want to be in a relationship, I would reply: (i) no time (ii) not at the moment (iii) not anytime soon. These more or less revolve around the concept of the limitations on my time, because of the workload I have to do at uni.
In economics, apart from thinking of time constraints, we can think of utility and cost (or disutility). Utility is sort of analogous to the 'happiness' I get from being in a relationship (utility covers more than happiness). Cost is the cost of being in a relationship.
Now, given my current situation, my cost function is a quadratic function, perhaps an arbitrary
C = 50t - 2.5t^2 where t = the time period, starting from zero. Let us assume that each unit of t represents a semester at university. Hence, t = 1 is the first semester of the first year; t = 2 is the second semester of the first year, and so on.
If I differentiate this equation with respect to t, I derive my marginal cost function, which is:
MC = 50 - 5t
Now, given my current situation, my utility function is also a quadratic function, perhaps an arbitrary
U = 1.5t^2
If I differentiate this equation with respect to t, I derive my marginal utility function, which is:
MU = 3t
Now, to maximise the utility I get from being in a relationship, I need to set MC = MU (this is an economics condition that is used for profit maximisation in firms).
Hence,
MC = MU
50 - 5t = 3t
8t = 50
t = 6.125
Hence, I would maximise my utility from being in a relationship after I graduate! Remember that each t represents a semester. There are 6 semesters in an undergraduate degree, and so a t of 6.125 implies that it would be most profitable for me to enter into a relationship after I graduate, perhaps a month or 2 after I graduate. Prior to t = 6.125, the marginal cost (disutility) of being in a relationship exceeds the marginal utility, or phrased differently, the cost of being in a relationship exceeds the benefit.
And this explains why I am still single!
Currently, I am in my final year of my undergraduate economics degree, and it is getting increasingly stressful. If I were to be asked why I am not in a relationship, if I want to be in a relationship, or when I want to be in a relationship, I would reply: (i) no time (ii) not at the moment (iii) not anytime soon. These more or less revolve around the concept of the limitations on my time, because of the workload I have to do at uni.
In economics, apart from thinking of time constraints, we can think of utility and cost (or disutility). Utility is sort of analogous to the 'happiness' I get from being in a relationship (utility covers more than happiness). Cost is the cost of being in a relationship.
Now, given my current situation, my cost function is a quadratic function, perhaps an arbitrary
C = 50t - 2.5t^2 where t = the time period, starting from zero. Let us assume that each unit of t represents a semester at university. Hence, t = 1 is the first semester of the first year; t = 2 is the second semester of the first year, and so on.
If I differentiate this equation with respect to t, I derive my marginal cost function, which is:
MC = 50 - 5t
Now, given my current situation, my utility function is also a quadratic function, perhaps an arbitrary
U = 1.5t^2
If I differentiate this equation with respect to t, I derive my marginal utility function, which is:
MU = 3t
Now, to maximise the utility I get from being in a relationship, I need to set MC = MU (this is an economics condition that is used for profit maximisation in firms).
Hence,
MC = MU
50 - 5t = 3t
8t = 50
t = 6.125
Hence, I would maximise my utility from being in a relationship after I graduate! Remember that each t represents a semester. There are 6 semesters in an undergraduate degree, and so a t of 6.125 implies that it would be most profitable for me to enter into a relationship after I graduate, perhaps a month or 2 after I graduate. Prior to t = 6.125, the marginal cost (disutility) of being in a relationship exceeds the marginal utility, or phrased differently, the cost of being in a relationship exceeds the benefit.
And this explains why I am still single!
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