Transaction Cost: College
When I started high school my freshman year, I was a 3 sport Athlete (Volleyball, Basketball, and Volleyball) as well as played softball in the summer. My sophomore year I decided to stop playing basketball in order to play travel volleyball that was in the winter months. Since I didn't have to go to practice right after school, I was able to join some clubs and work after school. During the summer I continued working during the week and playing in softball tournaments on the weekends. When junior year rolled around, I was still active in clubs, working more, and played softball. During that summer I was offered scholarships to play softball for a few D2 universities in Michigan, Wisconsin, and Indiana. This is when I started to think about school and what I wanted to do moving forward. My parents wanted me to accept the scholarships and play because I would have no student debt, but also encouraged me to attend any school I wanted (the only rule was it had to be somewhat close to home). After visiting numerous colleges, I decided that I didn't want to play softball and that I wanted to go to a well-known university. I applied to about 12 different universities and finally decided that I wanted to go to the University of Illinois to pursue a Computer Science + Linguistics degree. One of the transaction costs of going here was that I was going to have to pay a significant amount of money compared to other schools that I applied to (and the ones I was offered athletic scholarships for) and my parents could only help a little bit a year. Coming to that decision meant that I needed to work more and quit playing softball. So I started working another job, saved money, and only bought essential things. The summer going into my freshman year of college, I was promoted to Site Director for one of my jobs and was the youngest person to ever hold that position for the company. This meant more responsibilities, more hours, and most of all more money. That summer I worked roughly 65 hours a week between the two jobs. I did not have a lot of free time to spend with friends because of the long hours, but I believe that allowed me to appreciate money and taught me how to save.
By the end of my freshman year, I decided that CS+Ling was not the right major for me. I took both AP Micro and Macro in high school and enjoyed the subject. That is when I realized I wanted to change my major to econometrics. My parents were not happy with my decision because they didn't know anything about data analytics, but they knew that computer scientists were in high demand and that I would exit college with a high paying job offer waiting for me. My sophomore year I took all the required courses to transfer and was accepted into the major. By my junior year, my parents started seeing data analytics as a great career choice and support my decision to complete my degree in this field. One thing that I always wanted to do in college was study abroad, and my spring semester during my junior year was the time I got to spend 7 months in Greece. When I was applying for the program, I realized that they didn't have any economic courses that would transfer, but an independent study and an economic internship that can allow me to further my understanding in this topic. Once accepted, I was hired as an economic research intern at the Institute of Internation Economic Relations in Athens, Greece. This was an amazing opportunity, but I knew if I went abroad, I would have a difficult senior year (needing to complete 7 400 level econ classes, 2 upper-level math courses, and 2 upper-level statistic courses). I decided I wanted to go abroad anyway to enjoy this once in a lifetime experience. The summer following my program I stayed in Greece and took 2 online courses that would fulfill 2 of the upper-level courses I needed. It was a lot of work, and the time difference made deadlines difficult, but I knew it was in my best interest to complete those courses now rather than later.
Thanks for getting your post in early. That is helpful to me, given how many students there are in the class.
ReplyDeleteIn class later this morning I will try to give a working definition of transaction costs so that people who write their posts after that class session can use the term in the sense it is intended for our class. The operating question if costs can be divided into production costs, on the one hand, and transaction costs, on the other, then which is the appropriate category for some particular cost. What I plan to tell the class today is that if the transaction went as smoothly as possible and the cost would have to be incurred even in that case, then the cost is a production cost. In contrast, if things might get screwed up and you incur a cost so that doesn't happen, then that is a transaction cost. Coming to the U of I, you have to pay a steep tuition, definitely true. But I would term that a production cost. It must be incurred to matriculate here. I will save my example of transaction costs for the class session. You might come up with a different example in your reply to my comment.
You gave an interesting history of the decision regarding where to go to college. Later in the semester we'll talk quite a bit about the economics of risk and uncertainty. You might reconsider that decision in light of what we discuss then. Here I'll just say that there might have been another alternative to consider, which apparently wasn't on your radar. That would have been working for a year or two and deferring going to college till after that. There maybe advantages both socially and academically in going straight through, especially if you know others from your high school at the U of I. But it's also possible that some maturing before attending college is a good thing and if you were able to save during the time you worked you'd have less of a debt burden at the time of graduation.
Data analytics is indeed a hot field. And while I was trained in economic theory, so mostly did math modeling without data when I was doing econ research, as an administrator I found that having some data, like what we look at in class last Thursday, is informative and can help in decision making. But it seems that the data you have isn't sufficient to answer all the questions you'd like to answer. (Here you is the decision maker, generically considered.) I will talk a little later in the course about bean counters and the tyranny of what is readily measured. I'd hope that everyone who does data analytics would understand that, but I'm afraid its not always the case and many people develop quite a mechanical sense of things which missed much of the richness in any situation.
After learning more about transaction costs, I understand what you wanted out of this post. College was always something that I wanted to achieve because my parents were unable to attend college. My brother attends community college now, and he receives a great education. When I was applying to schools, the majority of my friends were attending larger universities and I almost felt pressured to do the same. I still stand by my decision to attend the U of I, but I didn't take in all the different options I had into consideration.
ReplyDelete