Stephen Chisadza
The standard first year definition of economics states that “economics is the study of how individuals and groups make decisions with scarce resources in order to best satisfy their wants, needs, and desires”. I recently had the opportunity to apply my university training to analyse a decision I was faced with in my personal life. It all started when my children’s school sent a newsletter to all parents declaring that hence forth, they will charge a penalty fee for children that were either picked up late from school or dropped off late for school.
I was immediately reminded of a chapter in the 2005 bestseller Freakonomics by Steven D Levitt and Stephen J Dubner. In it, the authors described a study by the Behavioural Sciences Program at Santa Fe Institute in New Mexico USA. The study found that in order to get parents to pick up their children on time from school it would be more effective for the school not to charge a late collection penalty fee. This was because charging a penalty would alter the moral behaviour of parents by removing the personal sense of obligation to be punctual. Could this same argument be applied to the case of my particular school and those parents that consistently drop their children off late?
I imagined myself as a 19th century economist/philosopher in an old English library writing voluminous books. Of the school’s policy I probably would have written that “such a policy would result in two prices for being late. The first price would be the loss of tuition foregone by the student. The second price would be the charge levied, at the time, on those late persons”.
I then imagined myself as a 20th century economist at an Ivy League University somewhere in New England USA, writing for an elite peer reviewed Journal. I would have used “eloquent” mathematics to argue: “assuming no externalities to education, the cost of education is equal to the upper bound of the net benefit that may be accrued by the learner. The net benefit of being late would therefore be (y-z) given (y,z>0), and (z=a+b) ,where (y) is the household’s utility derived from the child being late and (z) is the total cost of being late for school which is equal to the sum of the utility foregone by being late for school (a) and the fee charged for being late for school (b). So if y>(a+b) then the household is better off if the child is late for school”. And if I was a particularly smart US economist, I would then try and quantify these variables to come to a definitive solution.
As an economic consultant and father however, I have learnt that neither verbose descriptions nor eloquent mathematical expositions are particularly useful in practice. Put simply, the cost to my household of being late is the lost tuition time experienced by my children and now also the additional penalty fee. It would be silly to try and trade-off the benefits accruing to me of a few extra hours sleep against my childrens’ educational needs. Unfortunately, there will undoubtedly be those who think differently, and will now be happy to pay the fee as justification (reasonable or not) for their bad behaviour.