Needs VS Wants

          In the past few classes, we’ve discussed the importance of the economic process and realized how everything is interrelated to one another. Some of the things that we learned about is the difference of human needs from wants and the limited resources that we have. Human needs are the basic necessities that a person should have in order to continue living such as food, shelter and clothing. Wants, on the other hand. are the things that a person desired for himself and can only be satisfied for a specific period. Resources are scare and continuous human wants complicates this economic problem.

Price Control

          According to John Holmes, whose research into the link between alcohol pricing and public health was used by the government in framing the proposed pricing policy says "There's a huge amount of evidence that pricing is linked to consumption," The immediate effects of a higher minimum price included fewer acute hospital admissions and fewer deaths caused solely by alcohol, such as alcoholic gastritis. After two to four years there were also fewer cases of alcohol-related diseases.

          These problems relates to pricing control of tobacco and alcohol shows us how the government tries to lessen the consumption rate for these products. For me, it promotes a better lifestyle and also help the consumers to know the difference of needs from wants. 

What We Want and Need

          There other wants and needs as well aside from alcohol and tobacco. Needs can turn to wants too. A big house, a branded shirt. or food are wants. You might need it but spending excessively for it isn’t a necessity. We, as humans, always tend to want something. We buy luxuries because of endless wants and social pressure. 

Want:

• designer clothes

• big house

• latest electronic gadget

• excessive food

Need

• food

• shelter

• clothes

• basic hygienic materials

          When I was kid until recently, I grew up living with my parents. My parents, especially my dad, is a type of person who spends because he can afford it. He always told me to stop thinking spending too much.  Most of the times, I get what I wanted because of them but I always hold back myself because deep down I know that money isn’t easily earned. I grew up thinking that way and I guess I had the right attitude on this all along. Their absence now finally made me realize I was right; that necessities and luxuries are totally different.

          Recently, I just bought a Nintendo 3DS for myself. I was so happy at first, but after some time I realized how much money I wasted for it. I didn’t really needed it and now I have not been using it for months. The money wasted should have been gone to my savings for future investments. We have our own bad decisions (and I admit I’m still a bit of stupid when it comes to spending money) but this somehow helped me learn the value of money. 

         It is always a problem for everyone of us to control our luxuries. Wants tends to get in the way of our needs.  This is the same case for artist Erin Hanson who drew a series of illustrations showing the difference of her wants from her needs. Some of her illustrations are:

         After looking at her illustrations, I can somehow relate myself also to her. I also wanted these and this made me realize that I can actually survive without these luxuries.

Is there a solution?

    

    
          It is in human nature that we keep on desiring for something more than we need.  People tend to value luxuries above necessities. Especially in this rapid growing materialistic environment, I personally think it would be really impossible for us to stop from wanting something. I’m not saying it is wrong to want or desire for something, it just up to us how we handle ourselves, know our priorities, and limits. Buying impulsively and wasting our money excessively is a serious problem for everyone. It doesn’t mean you only have to buy what you need. Life is meant to be survived but also lived. We only live once and we should enjoy most of it. We can have our treats along the way, but only to the extent we can afford.

         Bottom line: Stay aware of your WANTS compared to your NEEDS and figure out which WANTS you can have without sacrificing your NEEDS and goals.

The College Degrees With the Highest Starting Salaries

In the past couple of days, some topics we have been going over in our economics class, and specifically had a quiz about, include; positive statements and normative statements. Positive statements are based on facts that can be proven, while normative statements are based off opinions and talk about what 'should' be.

The article that I have chosen in relation to our recent studies, is called "The College Degrees With the Highest Starting Salaries" This article contains a national survey about the different types of college majors and average starting salaries after graduating. 

After analyzing different colleges, a national survey showed that more than half (53.6%) of new grads were jobless or underemployed

Graduates in some majors like petroleum engineering which is the top bachelor’s degree have a starting salary of $96,200

The next two highest-paying majors are also engineering degrees:  computer engineering at $70,300 and chemical engineering at $66,900.

As you can see, a high percentage of these majors are engineering majors aside from management and computer science.

We also looked at direct and opportunity costs.

Opportunity cost is related to this because people used the time to get the degree, pay to attend school, and graduate but were not pursuing their dream by getting employed in their desired position.

The same example is used from earlier, about a national survey which showed that more than half (53.6%) of new grads were jobless or underemployed

This is saying that these graduates from certain different majors are either not finding jobs at all, or not finding jobs in their chosen field.

There are obviously different reasons for this, such as new graduates not even being able to cope with reality. The students don’t understand that governments subsidize degrees, so there are more degrees than the world needs, or can accommodate. It basically screams out how arrogant some people can be, and they don’t realize that because you qualify for a job, doesn't mean you’ll get it. Some people can go hard-core in their studies, racking up 4.0 GPA’s but then when they graduate, they will go apply for that one job they always wanted with the $120,000/year to start, and they won’t even get responses from certain employers, and they will go into a state of disbelief and realize that all these years of studying, and paying thousands of dollars for a major went to waste. 

This is clearly a real-world example of opportunity cost that occurs daily because of poor decisions by arrogant people.

The direct cost in this example, is the idea of going to college and spending money on tuition fee's, textbooks, and the time invested into obtaining your degree.

*example provided in explanation*

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THE POTENTIAL SOLUTION

What they have to do is think, why, what, and how will I get this job. The people obviously have to do something more than just get good grades in university or college, because there will always be competition for jobs, especially the high paying ones. Obviously some employers prefer experience over education. One idea to get around that, is to have a part time job during your school and have something that relates to what you want in your future, so that when you are applying in a few years for a great job, your resume can consist of more than just a college degree, but also some gained experience while you were in school. This will definitely set sparks for certain employers, because you aren’t only either experience or education, you are a slight combination of both, and you will definitely have some more preference during the job hiring process.

I’m not trying to call out all those failed graduates that are currently underemployed, or I’m not trying to discourage them, and don’t get me wrong, it still pays to get a degree but what I’m saying is that they have to be educated about what happens after they obtain their degree. They have to know about how high the demand for hiring people in their specific field is. If it’s a low job demand for that particular field, than they obviously have to create plan b, and be prepared for the worst if plan a fails. They have to realize that there is always competition for jobs, and they need to prepare to be the best candidate. They need to be more open-minded for other jobs or some kind of related experiences in their desired field, or completely choose a different career which has a high demand for hiring people, and will give them an opportunity to try and start something new.

That picture really made me think about reality...

Some people will truly believe with all their heart that their ‘real-world’ experience and an advanced degree would make them very desirable to hire, and be very successful in the field they love. But after sending hundreds of resumes, and getting rejected from multiple employers after obtaining a master’s degree, you can really start to feel degraded and realize how that degree was a waste of time. They start to feel like a total failure, and you start to feel like you went too far down one path to turn back and start on a new one (especially when another degree would not guarantee anything), and overall, it becomes a very hard situation to deal with and obviously your self-esteem and hope for the future diminishes. People just have to be more patient and realistic with their goals and not overdo certain things because it will cost you money and time in which could have been used to pursue something even greater or more possible.

So just be realistic with yourself, have good judgement, and give yourself time to think about what you really want, and be sure to educate yourself about post-graduation opportunities in your desired field of work in the future. 

- Mati Jankowiak

The Golden Circle of Higher Education

This week in Economics 40S, we looked at the direct and opportunity costs of attending a college. 

Working with Economics defines direct costs as "...out-of-pocket expenses that are required to do something." In the example used, it was the expense of tuition, books, and supplies necessary whilst attending college. Opportunity costs are defined as "...the value of the best possible alternative that is given up in the decision to use a resource." In the context of attaining a college education, the opportunity costs were investing the direct costs involved with college attendance, in the stock market or a mutual fund, or working a full-time job. 

But what if the direct costs associated with attending college or a university at that matter, had all gone to waste? What if employment prospects for these post-secondary graduates are a scarcity? 

This, in fact, is the case. 

As economist Andrew Jackson recently wrote in the Globe and Mail, "the supply of post-secondary graduates now greatly exceeds employer demand for their education and skills across a wide range of occupations". Evidence is shown in a recent CIBC study, which shows that fine arts and applied arts graduates are earning 12% LESS than high school graduates once their education costs are factored in. 

Beyond the prospects of employment, we must first look at the costs of attaining a post-secondary education. Tuition fees (in Canada and across the world) have risen faster than inflation since the 1990's, as today's student would pay twice as much for an undergraduate degree than they did in 1996, and nine times as much in the 1970's. However, even beyond the ever-increasing costs of university attendance, the competing pool of graduates is twice as large as it was in 1990. 

For example, according to Macleans, two-thirds of new teachers in Canada cannot find full-time work, forcing them to be employed in jobs outside their field of work, or even sometimes, jobs that require no post-secondary education at all. 

This makes us question, is there really always a return-on-investment from attaining a post-secondary degree, or is the money better suited for other opportunity costs?

What's interesting is that research from the US government suggests that only ONE of the top nine occupations expected to create the most jobs in this decade actually requires a university degree (according to the Telegraph UK). 

But then, why are politicians and governments, knowing these facts, advocating for more people to graduate with post-secondary degrees? 

If President Obama gets his way, there will be an even greater number of disappointed students with fancy degrees working as a barista at Starbucks, paying off 5-figure student loans for years to come.Unfortunately, degrees don't always equate to prosperous lives anymore.

Just recently, I came across a Ted Talk, given by author Simon Sinek, who popularized the concept of the "golden circle".

Although the golden circle was supposed to be used for inspiring great leaders and marketing, I think the basic concept of it can be applied to choosing higher education as well.

"What" represents what you do or sell. For a company, it could be a computer. For a student, it can be what degree you wish to attain, or what job you wish to have in the future.

"How" represents how you'll achieve your "what". For a company, it could be your USP (unique selling proposition). For a student, it could mean which post-secondary institution to attend, what grades to get, who you network with, and so on and so forth.

Most importantly is your "Why". It represents your purpose, cause, calling, etc,,. Profit is not your "why", it's a result. Very few companies know why they do what they do, and in my opinion, I think students do as well. 

Companies and corporations fail because they go from the outside of the circle to the inside. They have a clear understanding of what and how they can achieve their goals, but don't understand why. Innovative and successful companies, like Apple, go from the inside out. Sinek used this example:

1. Why: "Everything we do, we believe in challenging the status quo, we believe in thinking differently"

2. How: "The way we believe in challenging the status quo is making our products beautifully designed,   simple to use, and user friendly."

3. What: "We just happen to make great computers, want to buy one?"

Too few students are attending post-secondary education institutions for the right reasons; profit, pressure from parents/society, and more. Many know what they want to pursue, and how they can pursue their dreams, but few know why. In these uncertain economic times, I'd suggest sorting out the "why" first - higher education is a large and risky investment. If your sole reason is for profit, it may not be the smartest choice. Ask yourself, "Am I doing this for the right reasons? Would I do this regardless of how much I get paid?" before wasting precious scarce commodities such as your time and money on a job where you may not even need a degree. Look for apprenticeships, become a manager at McDonald's, become an entrepreneur, teach break-dancing; the possibilities are endless. 

As University of Massachusetts economist Nancy Folbre stated, "We no longer live in the 'Golden Age of Human Capital'". Reflect upon your choices, and make the right decisions for YOU.