Nova workboard

a blog from young economists at Nova SBE

The microeconomic life of a Nova Sbe student

Life at Nova Sbe is hard and it requires a great effort. The workload the students have to face is huge. When a Nova student wakes up, she knows there will be just one thing to do that day, studying.
In such a scenario, it is crucial for the student to be able to manage efficiently the resources she has, in other words, her endowment. This consists of two different types of resources: time and energy.
Having access to a well-provided library, the student starts looking for some books that could show to her the key for a successful learning. The first impact is a bit confusing, though. There are many books from which the student can choose and she does not know where to start. After the initial hesitation, the student realizes that she will better pick up a book from the economics section, since economics is the study of how to allocate scarce resources among competing ends (Lionel Robbins: Essay on the Nature and Significance of Economic Science (1932)). The student’s glance stops on a microeconomic theory book, which is about the maximization problem of the consumer’s utility and the minimization of her expenditure. The student thinks that these two problems perfectly fit her situation and could be helpful for solving her problem, thus she decides to borrow the book.
After having read the book, the students understands that the over mentioned maximization and minimization problems are actually two sides of the same coin. As long as the optimal solution of one problem is the constraint to the other.
The microeconomic theory claims that the student could choose indifferently one or another approach, so the students is now wondering if she should minimize the expenditure (time and/or energy) to achieve a certain utility level (aimed grades average) or maximizing the utility (grades average) given a certain budget constraint represented by her endowments of energy and time. Depending on the student’s preferences and thus on her utility function, the first approach will probably leave some endowment free to be used for other purposes. If the student choose to maximize the average grade, she will probably use most part of her endowment for studying. It could be said that the first approach is for those more social students, while the second approach is for students that value studying utmost.
But she is not alone in class, other students face the same problem. What if they could trade part of their endowments? The market where these transactions take place is something well known among the Nova Sbe students, the study-group. Indeed, several assignment are to be done in-group. Let us now see how students could mutually gain from a “market efficient” study-group.
Let us define two types of students depending on their endowments and with same skills. The first is the “asocial” student, which works time intensively. The second is the “social” student, which is energy intensive. We can extend this to the criteria of groups’ formation. One can say that in principle social students have less difficulty to find a group than the asocial students do. As a result, asocial and social students will be rarely gathered in the same group. To improve this situation the students should form groups with diverse composition. Let us say two energy intensive and two-time intensive students.
This will end in a more efficient workgroup enhancing the personal skills of each student. Working together, during the learning process, the social students will “buy” some time from the “asocial” while they will “buy” some energy from the social students. In this way, the difference between the problem of minimization of the expenditure and the maximization of the utility will become very slight and everybody will gain more resources to spend for other activities. Through the exchange mechanism, the social welfare would increase.

Francesco Cestari – 731 –

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Author: studentnovasbe

Master student in Nova Sbe

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