I’m heading into my first year of college and want to make sure I get off to a good start. As an economist, what’s your advice for succeeding in school?
The most important piece of advice I can give you is that combining Malibu and pineapple juice is a very, very bad idea. If you follow this wisdom, your first week in college will be better than mine.
I do have a bit of economics-based advice as well.
The best thing about college is that it is a place to try new things and find out what you love. At the same time, you cannot do them all. Your time has value–there is an “opportunity cost” to each activity you do.
This means that if you’re staying up till 3 am to get the next issue of the newspaper out, you won’t be at your best at track practice the next morning. The same logic applies to the buffet of college courses at your disposal. It may seem tempting to load up on extra classes so you don’t have to choose between the history of French cinema and Surviving the Coming Zombie Apocalypse. However, the energy you spend scrambling to keep up with both course readings might be better directed at acing just one of the classes.
So go ahead and dabble at the start of your college career. But be prepared to cut back as you discover which activities and classes you love and which ones aren’t a good fit. And avoid the “sunk cost” fallacy, which refers to the fact that people find it harder to give up on something they’ve invested a lot of time or money in–even when it’s clearly not working out. If you hate being pre-med, for example, you don’t have to stick with it just because you already passed organic chemistry. It’s okay to quit. With that in mind, get out there and start learning how to beat those zombies.
I’m trying to graduate from college with as little debt as possible–so for the last two years, I’ve worked 20-30 hours a week at a restaurant off campus. But the result is that I’m often exhausted and under-slept, which I worry is getting in the way of my grades. I don’t have much of a social life either. Lately I’ve been thinking of taking on more student loans so I can focus on school. But I’m planning to go to law school, which will cost even more money, so another part of me thinks it’s better to keep college debt to a minimum. What’s your advice?
When it comes to personal finance, it’s often helpful to think about the impact of your decisions on your future self. If you choose to take loans now rather than working, you’re effectively borrowing from your post-college (and maybe post law-school) self. The future-you will have to pay back those loans, with interest–which means that borrowing $1 now will cost you more than $1 in the future.
But there can still be good reasons to take out loans. First of all, your future self may be a lot richer than your current self (indeed, he is likely to be). If this is true, then he doesn’t value each dollar as much as you do–and it would be better for him to pay.
Think about it like this: If you get an additional $100 now, it might be the difference between going out to dinner with your friends a few times a month versus slurping ramen noodles in your dorm room. For your future self, this $100 might mean upgrading to a slightly fancier bottle of wine. He values this, but probably not as much as you value having a social life.
The other issue is that you are investing now for your future. If your work is keeping you from getting excellent grades and, in the long term, impacting the law schools you’ll be able to get into, you may be hurting yourself in the long run. It might be better for your future self if you get better grades, get into a better law school and get a better job down the line–even if that means writing a regular check to Sallie Mae.
Emily Oster is an associate professor of economics at Brown University and the author of Expecting Better: Why the Conventional Pregnancy Wisdom Is Wrong — and What You Really Need to Know.
Got an everyday problem that could use an economist’s point of view? Send Emily your questions at firstname.lastname@example.org.