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Campus Tech Decisions: Think Like an Economist
June 21, 2011 - 9:00pm

While it is true that our friends, the economists, failed to predict some key events (…say a global economic crisis for one, but whose keeping score?), the dismal science does have a few things to teach us about decision making in campus technology.

Sunk Costs: When it comes to deciding how to spend our scarce technology dollar, it is best to focus only on future benefits and future costs. We often stay with old technologies or old practices because we have already invested so much time, energy and money into these technologies and practices. We should think like an economist, and make every decision as if we were starting fresh. Those investments are already gone, they are "sunk", and we should not factor them into our decision making.

Thinking at the Margin: We all want to make big changes, but economics teaches us that real change happens at the margin. We should ask ourselves, what would it cost to make a small change, and we should follow that course of action. Many small changes add up to large changes, and large shifts will often never happen. Are we looking for small academic technology wins, ones that can improve teaching, learning and research at the margin? (I know that I'm taking some liberties with the concept of marginal costs, the cost of the next widget, but I like the argument).

Incentives: Economics can be boiled down to the belief that people respond to incentives. If we want to leverage technology to improve the productivity and quality of the educational services we provide then we need to get the incentives right for people (professors, students, departments, etc. ) to make these changes. Mandating change does not work.

Status Quo Bias, Loss Aversion, and the Endowment Effect: We over-value what we already have. We will go out of our way to avoid losses, and we will work harder to avoid loss than acquiring something new. Technology leaders, faculty and learners are all equally vulnerable to these cognitive traits.

Economists of the world, and those that love them, please improve upon these ideas (or let us know why they are totally wrong-headed!)


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