Behavioral Economics
People are inconsistent over time and are not always rational
There are many different ways of displaying how people are inconsistent over
time. The most obvious form of this is achieved through procrastination along with a
lack of planning and commitment.
A survey was recently carried out amongst a group of school children. Two
groups of secondary school students were asked the same questions but three months
apart. The students had the option to sit an exam on a Wednesday or Thursday.
Group A were asked in September if they would prefer their Economics Christmas
exam to be on Wednesday the 11th of September or Thursday the 12th.
The students had the option of paying a fee of €5 in advance in order to have
the exam on Thursday instead of Wednesday.
The results show that the majority of students had no preference regarding the
date of the exam. In fact, only 20% of students in the class of 30 said they would
commit to paying a €5 fee. This left almost 80% of students who would rather sit the
exam the day before.
Group B were then asked on Tuesday the 10th of December if they would prefer the
exam to be tomorrow (Wednesday) or Thursday. Again, the students had the
opportunity to each pay a fee of €5 for the exam to be postponed until the following
day.
At this stage the results of the survey appeared to vary greatly. Approximately
93.4% of students agreed to pay the €5 fee the night before the exam as the felt they
were “unprepared”. This left only 6.6% of the class feeling confident that they would
pass their exam.
This survey was successful in demonstrating how people can be very inconsistent
over time and as a result, not always rational. When we face trade-offs our opinions
of the choices given vary depending on the time in which they were given to us.