Self-Control and Religion

An article in the New York Times has said that religious people have more self-control than others. Even when compared to spiritual persons, religious ones still do better. (Spiritual people are those that do not necessarily believe in God but more on the connection or force they feel between them and other people) Studies also found that those who pretend to be religious, like attending Sunday church for appearance's sake, fail to be the same as the truly religious when it comes to self-control.

How so? And does that mean that those who aren't the religious type should start to become one?

"Religious people...are self-controlled not simply because they fear God’s wrath, but because they’ve absorbed the ideals of their religion into their own system of values, and have thereby given their personal goals an aura of sacredness. He suggested that nonbelievers try a secular version of that strategy"

You can start by having private meditation and joining organizations that share your values and ideals.

“People can have sacred values that aren’t religious values..Self-reliance might be a sacred value to you that’s relevant to saving money. Concern for others might be a sacred value that’s relevant to taking time to do volunteer work. .."

The Value of a Bonus

Bonuses, especially the monetary kind, are supposedly given to motivate and reward people in accomplishing set goals and tasks. Intuitively, the larger the bonus is, the better it is in motivating people in accomplishing or surpassing a given goal.

However, Dan Ariely, proves this theory only to a certain extent. Larger bonuses work well if the task or job at hand requires only physical effort or mostly mechanical skill. When tasks take on a more mental or cognitive nature, large bonuses fail in having people do better.

We found that as long as the task involved only mechanical skill, bonuses worked as would be expected: the higher the pay, the better the performance. But when we included a task that required even rudimentary cognitive skill, the outcome was the same ..: the offer of a higher bonus led to poorer performance.

Gift and Resolution Tips

Below are a couple of links offering advice on how to give the 'best' gifts and some practical new year resolutions:

1. Gifts: It's all about perception. The key is to give a gift which your recipient perceives as more valuable to them than to you. So, this works best with gifts of kind rather than cash (though cash works just as nice).

2. Resolutions: Be practical about your goals and make resolutions that reward you. i.e. Have a vacation on a certain month, etc. The following tips should help you stick to them: Write them down, Make it specific, Set a deadline. Just like making plans at work, they should be SMART: specific, measurable, achievable, realistic and time-bound.

Reaching Out

This year has taught me the value of having good people around me. I think without them, I wouldn’t have persevered as much in work or in everything else. I have stayed on course instead of just quitting because of them.

We might take for granted our social network but if we try to be alone for some time, we will soon realize its importance. We are hardwired to connect and reach out to other people. In the movie Cast Away, Tom Hanks wouldn't have survived alone in a deserted island were it not for an imagined relationship he had with a volleyball, which he named Wilson. Another evidence is found in economics wherein we are all better off trading (our goods, our skills) with other people, instead of making or doing everything ourselves. Just imagine how far society has advanced in the past 100 years because of trade.

Like learning, we need to continuously grow our network according to our passion and interests. One must constantly reach out to others, not because others need him, but because it is in his self-interest.

Added Players and Added Value

If what you do can easily be copied by other players (or competitors), then you bring no added value. Put another way, if you enter the industry and just copy what the other players are doing then you bring no added value. You'll decrease the size of the pie for everyone when you enter. (The pie here refers to the total money that can be made in the industry)

I think most businesses, especially franchises, fall into this category. As long as new players enter, supply will increase and demand will soon fall. Unless demand is ever increasing or there is still unmet demand, entering the game and copying other players will be a good enough strategy.

One good example is the water-servicing business. In the Philippines, setting up a water servicing business has been once a profitable venture. As new players came and saturated geographic locations, profits predictably has fallen. The additional players who are competing for the same customers has decreased the size of the pie.

One good strategy for this situation is by adding value. Your added value is the change in the size of the pie when you enter the game. If you add value, then you increase the size of the pie.

Customers usually have a tendency to return to you once they buy your product/service but this is not always the case. Customers can be indiscriminate when products and/or services between sellers are alike. One way to add value then is to create loyalty among your customers.

A very good concrete example of creating loyalty can be found in the airline industry. Mileage or frequent-flyer programs create loyalty by rewarding customers for their patronage thru giving away free flights when a certain mileage has been flown in their airline. Such programs bring incentive to the customer to fly again with the same airline. Airlines then can look forward to keep their customers while at the same time attract new ones.

From Co-opetition by Adam M. Brandenburger and Barry J. Nalebuff

Individual Economic Welfare

According to the book, The Millionaire Next Door, those who receive (continued) economic welfare from their parents have the least chance to become millionaires. This has been a worrisome point because being well-off while growing up might actually be a handicap in reality. While I'm sure it is not everyone's dream to become a millionaire, being in a situation where one receives welfare almost automatically puts him/her out of the potential millionaire's list.

Logic being (if I'm correct), economic welfare received by the individual dampens the urgency and the necessity of the individual to improve or better himself. The reality that one has to compete in the real world and to be one's own man, has become distorted due to the economic cushion he is presently receiving. (More) dangerous is when the individual receiving the welfare becomes dependent on this aid and perceives it as his 'right'. At the extreme, what's the incentive for an individual to work or better himself, when his economic needs are already taken care of?

I see a parallel or similarity of this individual welfare with businesses receiving protection from the government. Businesses receive protection when governments impose tariffs on competing imports, and subsidize the industry in which the business is in. In the worst case, these businesses receiving protection has become uncompetitive, producing products that are costly and whose features are inferior compared to the competition. Ultimately, this higher cost is passed on the customer in terms of the higher price and the missed opportunity of receiving a better product.

While government protection of native businesses have legitimate reasons like helping businesses transition to a true competitive market environment, I have yet to read a business that is number one in its industry, and which was once a product of protectionist policy.

Going back to individual, in order for him to be truly independent, the question now is when should economic welfare be halted? When the child turns 18? When he/she finishes college? Or when he/she enters employment?

I guess it is dependent on the goals of the person, his education and his ambition. If one has ambition and is aware of the above knowledge, what do you think is he/she likely to do?

Gratitude Journal

Carla Kay White, a designer and blogger claimed her life changed when she started a gratitude journal. To write the journal, one has just to write a few things that made the day positive.

To enumerate some of the things that changed in her life after keeping a gratitude journal: Sleeping better, losing 20 lbs, and doing great in the job.

She also designed an Ipone app called happytapper and it's an app to keep an Iphone gratitude journal.

Sounds good. Will try this.

Thanks to The Happiness Project for the tip.

I, Pencil

Simple? Yet, not a single person on the face of this earth knows how to make me

I, Pencil is a story about one of the more taken-for-granted things in our life, the pencil. I, Pencil narrates the amazing tale of how the pencil is made and how just the right quantity of pencils is always available in the market, with no one person planning the whole thing.The story demonstrates economic principles at work like principle of incentives and the law of supply-and-demand.

The story is simple and was written by Leonard E. Read. December marks I,Pencil's 50th year of publication. It is also found in Russ Robert's novel: The Price of Everything.

Tip from Cafe Hayek.

Easy-to-Understand Economics

One of the best ways to grip and understand an idea is when you encounter it through a story. Just as the Gospel spreads the teaching of Christ thru parables, the layman can easily understand economic principles thru stories as given by Russell Roberts.

Here is a link of some economic principles as explained by Roberts. The Comparative Advantage principle is told using a story.

Also, Russell Roberts also has written 'economic' novels. A couple of them are: The Invisible Heart and The Price of Everything.

Trust, Ownership and Incentives

I think most, if not every one in a supervisory or managerial position has this experience: One implements a (new) rule which involves the cooperation or adherence of a group of people. Depending on how the rule was created and how big the impact is on the people who will be following it, the sucess of its implementation varies from religious obedience down to utter neglect.

As more organizations become flatter and hybrid, the command and control style of leadership is becoming outmoded or sometimes just plain ineffective. Imposition of rules paired by penalties gets us superficial commitment from people: People obey half-heartedly and will have the tendency to not stick to your rule when you're not around.

From command and control leaders, leaders must become team builders or catalysts. Before rolling out a project in particular or working with anybody in general, leaders must be able to build trust, ownership and incentives: the same elements which make a free-market society function.

Trust creates risk-taking and honesty. Ownership promotes accountability, self-interest. Incentives promote actions that will benefit the whole.

As in a free-market society, subordinates and members must be able to take risks and must be able to trust their peers and especially their leaders, before being able to fully participate with management. Members take risks when they voice out their concerns or volunteer their ideas.
To build trust, there must be open avenues for giving and receiving feedback.

Management must take advantage of their members' propensity to act in their own interest. When a member owns or is responsible for something, they act to to promote or protect this interest. Whenever there is a project, those that get involved are also those that tend to promote the project because they act like its owners. The more a leader involves others, the more they will get behind a project or a rule.

Finally there must be a pay-off for all the effort and actions of our members. If there is a monetary incentive for a successful project or for a bright idea, then the better. However, if there is none, then the leader must be creative. Recognition among peers and giving credit to those due are the least and simplest incentives one can and must give. Pointing out the monetary or cost benefit of a project to members, so that they realize their impact to the company, is also essential.

The backbone for all of these are a set of rules that the leader must lay out. Rules or guidelines must be present to set the norms and expectations from each member. The leader must enforce these rules so that a member will feel safe in voicing his concerns, that his ideas and contributions will be rightly credited to him, and that he will be guaranteed of incentives (if there are any) when he delivers what is expected from him.

The Best Time To Do Something

When you don't feel like doing what you know you must, that's the best time to go ahead and do it anyway. That's when you can break through your old habit patterns to a new level of focus, performance and achievement. -Ralph Marston

Procastinating is not our natural state, at least not for me. At the back of one's mind, there will always be this undone or unfinished business that will needle or dog you. Depending on how serious or important the matter is, our subconscious will tell us to get this thing over and done with sooner or later.

It will just take a simple nudge to get you started. A positive thought, A vision of how things will be after you've settled your business. Or just the thought that you're tired of procastinating and delaying things already and that THIS is not you.

Change the Game

The greatest profits come from not playing the game a little differently, but from changing the game. Changing the game doesn't just mean changing the Rules, it also means changing the game's other different elements: Players, Added Values, Tactics and Scope..

Change one of these and you change the whole game.




From Co-opetition by Adam M. Brandenburger and Barry J. Nalebuff

Advice for Aspiring Economists

Click here for advice from Greg Mankiw's Blog.

Steve Levitt tells why..

Getting out of/into a Habit

Below are some techniques and the economic principles behind them when we want to get out of a habit. Same principles work when we want to have a new habit.

1. Distance – Creating distance minimizes temptation or in a way puts a barrier between you and what you crave (e.g. cigarettes, alcohol). This limits supply and deters demand. As an example, there was a website that recommended only storing healthy food in one’s refrigerator so that when a craving occurs, one can only reach and eat food that will not make one fat.

2. Substitute – If one is to stop doing something, then one must fill that activity with a substitute. To be successful, that substitute must be cheaper, or more convenient to do. This will be the incentive to do the substitute activity instead of the current habit. For example, if you want to stop eating every now and then, replace it with some easy-to-do substitute like walking. Walking is something very easy to do. If you substitute going to the gym in place of eating, then the latter easily wins because of the former usually creates a mental image of something that’s very strenuous or something that requires a lot of effort.

3. Putting things in automatic – Programming your time into specific activities or tasks is committing yourself and limiting your choices. Your mind and body will adapt once it knows that for the given time ahead, you are only going to be pre-occupied with doing something else. Did you know that once a person is given a set menu for a day, he/she tends to eat lesser calories as compared when he/she has more choices to eat?

4. Goal setting – The self-esteem, pride and sense of accomplishment one gets when one reaches a goal are very powerful incentives in changing a habit. So when one decides to do away with a habit, one has to set some realistic goals. Of course, praise from peers also helps when they notice you progressing towards a goal.

You, Inc.

With the ever-changing business environment and economies being closely linked nowadays, employers and employees alike have to constantly evolve and find ways to compete and survive in today's market.

Given that insight, one therefore has to think like a company. Employees are only good as long as the company finds value in hiring their services. So it only makes sense that employees treat their employers the same way. You don't want to be caught off-guard when one day your company tells you that you suddenly have no value to them, or that they are suddenly closing shop and you'll be out of work.

As individuals, you have to know what you're good at and what skills will be most marketable to most companies. Like companies, we constantly have to scan the environment for opportunities. We always have to make investments in ourselves by constantly learning new skills so we can always be ready to whatever the business environment brings us.

There is this sort of thinking, at least for me, that it's either you have a full-time job or you have your own business. I think that view is incorrect. We can/must do whatever it is needed to make us self-sufficient just like what companies do.

Anything goes for us as long as this makes us happy. We can have a day job and have other 'sidelines' that supplement our income, or we can have several jobs, or we can start-up a business.

You can be an entrepreneur anytime. Entrepreneurship is all about taking advantage of opportunities and making money in the process. It doesn't strictly restrict itself to having a brick-and-mortar business, especially now in the information age.

In a capitalist or free-market society, we are always trading something. We trade our skills for pay from our companies. We trade goods when we own a business. It's all about trading something. So, just like econ 101, us individuals must know what our compartive advantage is (or what our strenthgs are) and build a living out of it.

The Dream Machine

What if there is a sort of dream machine where you hook yourself up and then be able to live out your dream or fantasy life in real time?

You'd never have to eat or go to the bathroom while hooked to this machine. This machine will run endlessly and you'd never have to worry of it malfunctioning or suddenly stopping.

While hooked up, if you dreamed it, you will never be poor, you'll be a celebrity, a person of power, the most handsome or most beautiful person, etc. You will be the center of the universe, so to speak. You'll be guaranteed of living out your dreams..

The only caveat is you'd never be able to unhook yourself out. You will live out your remaining years hooked to this machine.

Would you agree to have a life like this? Your comments would be appreciated.

From The Invisible Heart: An Economic Romance by Russell Roberts

Getting things done from people

The central lesson I learned from exotic animal trainers is that I should reward behavior I like and ignore behavior I don't. After all, you don't get a sea lion to balance a ball on the end of its nose by nagging.

If you don't have any incentive/penalty in place or authority in rewarding/disciplining someone or a group of people, rewarding behavior you like by recognizing and praising it while ignoring those that are not will be good enough. This method has worked for training animals and though it sounds manipulative, it may be proven to work with people too.. See more here.

When to Buy Equities

. .in 2000, .. the global price-earnings ratio was 35; shares look relatively much more attractive now, since the ratio is down to ten. A recent analysis shows that, when American price-earnings ratios are low, returns on equities over the next decade average 8%; when they are high, returns average 3%.

See complete article here.

Career advice - Do what you do

When someone asks me for career advice (and I’ve been known to volunteer this advice, even unasked!), I say, “Do what you DO. What do you do already, in your free time? Try to do that as your job.” In my case, although as a Supreme Court clerk I surely had one of the most fascinating jobs for a lawyer, on the weekends, I was writing a book. This was a helpful clue as to a profession I might enjoy. I have a friend who always felt guilty in law school, because he was wasting so much time playing video games; after graduation, he gave up a prestigious clerkship to work for a – you guessed it – video game company.

..It can be hard to identify your “passion,” but you can identify what you did last Sunday afternoon. “Do what you do” is useful because it directs you to look at your behavior, rather than to your ideas – which can be a clearer guide to preferences. It’s not possible for everyone, but to have work that is play, and play that is work, is a very, very happy state.

See complete article here.

from Gretchen Rubin, The Happiness Project