Decisions Managing Future Income Risk

It took me awhile to figure out my major. I am now doing a double major in Psychology and Economics, plus a minor in Statistics. I am pretty satisfied with my choice, and I think it prepares me well for a career in business, which I am interested in after graduation. I’ll talk about how I ended up in this combination, and the decisions I’ve made along the way.

I entered college in Hong Kong with a major in Media, which was an entire different path compared with what I am doing now. The time in Media was full of fun, but soon I found that wasn’t something I wanted, I just don’t have the passion to start a career in the media industry. Besides, the pay for jobs in the media industry is pretty low, which further confirmed my decision to change major. Switching major was possible, but it wasn’t that flexible as it is here in the US, and I didn’t really have the chance to explore different majors. I knew I didn’t want Media, but what major I want to get in? I don’t know. So at the end of my freshman year, I decided to transfer to the US.

I was accepted by U of I as a sophomore, and soon I found my interest in Psychology. I love studying the mind and behavior of people and fell in love with it immediately. Psychology is also a subject that could be applied to various different fields. I was glad I figured out something I’m interested in, but on the other hand I also need to plan for my future and land myself a job with a relative good income. At first, being a counselling psychologist was the job I wanted the most. I found myself enjoy helping people and I gain true happiness through it, and I believe it’s a job that could help me realize self-worth. But I didn’t choose that path because I knew I won’t be able to afford myself for a long time after entering counselling. Language and cultural background are critical for counselling psychologists, so as an international student I will definitely choose to go back to my home country for a counselling career. I am from mainland China, and unfortunately the psychology counselling industry in China isn’t as mature as the US. Psychology is still only in the beginning stages in China, and counselling is a career that requires a significant amount of time and money input in the beginning years. The income isn’t that rewarding in the beginning, and you will be able to only afford yourself after 3-5 years in the industry. Meanwhile, others might have already accumulated some wealth. Not to mention whether I will be good at it or not, it’s just too risky for me. I’m sure my parents will be willing to support me, but I feel bad relying on them for such a long time.

So I thought of other fields that psychology could be applied, and business came to my mind. I’ve always been interested in business, and it’s a career with pretty good reward. For me, while a counseling career means high interest, high risk, and low income (at least in the short-term), a business career means relative high interest, although not as high as counseling, but low risk, and relative high income. So it’s a good balance for me. HR and HR Consulting are safe choices for me. There is an area in Psyc that specifically studies how Psyc is applied to the workplace, and HR Consulting is very similar with what Industrial/Organizational Psychologists do in their research. I prepared myself by doing two internships in HR and research in I/O labs. My second choice in business would be Marketing Research and Consumer Behavior Research, which is also in business, and where I could utilize my psychology knowledge to study and predict consumer behaviors. I did a marketing internship in my sophomore year and also gained a closer look to the field by working as a research assistant in the Cultural Psychology and Marketing Lab in the business school. Even if I’m not able to do counselling right now, I’m glad that I love my second choices, business seem to be an exciting area for me. Besides all these, I declared my second major in Economics, a major that could be well applied to business. And also a minor in Statistics, to gain analytical and quantitative skills that are necessary for a business career. I believe a liberal arts degree will benefit me more than a specified degree in business, because I believe everything will be connected in the end and contribute to one’s career and life. And I will still be able to do graduate school in business to gain the essential business skills.

If possible, I still plan to go into psychology counselling maybe in my 40s, when I have enough economic strength to afford and pay for staring a counseling career. There are people succeeded this way, but I’m not sure if that’s realistic for me at that time. But for now, I would pursue a career in business, which I have a passion in, and exposes me to lower risk.

I don’t have siblings, and I’m the only one in my family studying abroad, so their experiences are not very applicable for me. But I did learn something from friends who studied in the US. International students face the choice of going back to their home country or looking for a job in the US right after graduation. Many people have said that, either is fine, but as soon as you’ve made your choice you should stick and work hard for it, and do not be halfhearted. The ones who thinks about the two paths at same time and wants both are always the ones who fail. One’s time and energy is limited, so to gain something, you have to focus and give up something else.

Connecting the Dots and Reflection

After reading through my previous posts, I think the underlying connection between these posts is that they are all a part of the question that how can organizations work more effectively.

In the organization experience & transaction cost post I wrote about my experience in an organization as an intern and also examples of transaction cost in an organization. By writing this post I thought about my past experience carefully and started to think about the bigger picture of how an organization is structured.

In the opportunism post I wrote about scenarios that people acting or not acting opportunistically in a film I watched before. I think opportunistic behavior is something organizations need to deal with, and organizations would always try to find out ways to avoid their competitor’s opportunistic behaviors. This post helped me to think about opportunistic behaviors and the reason behind from the individual level. This post also connects with the moral hazard problem and the efficient principle at the organization level. I think the ultimate purpose to deal with opportunistic behavior is for organizations to reach an efficient outcome.

Then in the team structure post I discussed the team structure during my internship. An effective team structure is critical for team success, and therefore the goal of discussing team structure is also to make organizations work more efficiently. I have always been interested in human capital consulting and organization design, so I found this part about team/organization structure particularly interesting. I’ve also learned about the importance of motivation and coordination. For a team structure to be effective, we have to motivate each team member. At an organization level, to have the organization produce efficiently, management will also have to motivate and coordinate different team and functions. Coordinating the interest of different people and also motivating different people towards the common goals is what management need to do. I think this connects to last week’s class discussion about management, and this is more obvious to me than the time I wrote the post.   

In the transfer pricing post about “illinibucks” I imagined if there is a “illinibucks” system where would I use it, and also possible problems about the pricing of campus services. I thought about this from a supply and demand perspective. I believe that “illinibucks” should be used in areas where there is excess demand and shortage in supply, this can somehow reduce the gap and better allocate resources to people most in need. This post connects to the idea of how should organizations deal with internal transaction and set the most efficient transfer prices. This post, together with the excel homework on transfer pricing give me a better idea about internal transactions in organizations.

My approach to respond the posts changed a lot. At first I didn’t have a clear idea about the course, so I was just responding to the prompts and wrote pretty randomly about my experience. As the course processed I started to become clear about the course theme and also the main ideas discussed in class. So I tried to link my answer to the prompt to the course theme and also approach from an economic perspective. My thinking changed, but the process of writing didn’t change much. I usually will look at the prompt at the beginning of the week, so that I get an idea and start thinking what to write. If I come up with a good idea I’ll take a note, usually just a few word. And then I will collect all my notes, structure my post and write the post at the end of the week. I sometimes also start writing in the middle of the week if I think I have good thoughts, and finish or make changes to it at the end of the week. It’s much easier to write and takes much less time if I have the right experience for the prompt or if I have a lot of thoughts on that prompt. The writing process for the organization experience post and the transfer pricing post went much smoother than the opportunism post. I couldn’t find a very appropriate example for the opportunism post, so I ended up writing a scene in a movie I watched.

If I’m writing the prompt, I would be very interested in writing how economic principles are applied to company cases. For example, the General Motors and Northwest Company examples we discussed at the beginning of the semester. Providing the background info and reading material and ask us to write about our understanding of the companies’ decisions, how economics principles worked in the company cases, and the connection with the class. It would be challenging and a lot of work will need to be done to write this kind of post, but I think the gaining from this kind of analysis would be very practical and help us better know how economics principles work in real world cases.

"illinibucks" - an eMoney Syetem for the University

I think that the best places to use “illinibucks” are places where demand is always greater than the supply. From my past experience on campus, I would use “illinibucks” in class registration, booking study rooms, and also for high-demanding performances at Krannert Center.

There are a lot of classes that have a high demand and always fully registered, making it difficult for many people to take these classes. Some of them are interesting courses that have a very good reputation, some of these classes are mandatory major or minor requirements. I have a minor in statistics, and STAT420 Methods for Applied Statistics (mandatory for several different major and minor) is well known for its registration difficulty. Stat majors have priority for this class, but minor students do not. The department does not provide sufficient support for students to register for classes, and instructors cannot provide override. So I wasn’t able to add this course for 2 semesters. If “illinibucks” could be used here, I would be willing to invest. Because otherwise I won’t be able to complete my minor.

Study rooms are difficult to book during busy times in the semester, using “illinibucks” to book study rooms would help better allocate study room resources. People does not need study rooms that much would study somewhere else instead, making study rooms available for those that really need it (e.g. ones that need a space for group discussions/group projects).

Performances at the Kranner Center would also be a good candidate for “illinibucks”. Tickets for some good performances are extremely difficult to get, so priority could be given to the ones that are willing to pay more “illinibucks”. Lang Lang’s (famous Chinese concert pianist) piano performance (Performance Link) last week at Krannert Center was one of those hot performances. A lot of my friends started to buy tickets when it was first released, and tickets sold out very soon. The ticket price for UI students is just $10, but the resale price was raised to $50 and even $100 a few days before the performance.

It is very interesting that my previous university did have something similar with “illinibucks”. Before I transferred to the U of I, I studied Media in Hong Kong. We needed production and media equipment (cameras, tripods, lighting equipment, dolly tracks, etc.) from time to time for our classes and projects. The college offers eCash to students to rent these devices from the rental center. Students taking senior courses will be granted more eCash. Better devices are more expensive, so for example if we choose to rent a very good camera, we won’t have enough eCash to rent a very good set of lighting equipment. So it was actually pretty fun to plan and try to utilize our eCash in hand to reach the best outcome for our projects. It becomes even more interesting when it comes to group projects, because we could aggregate our eCash together and make better investments. I think the purpose of eCash is to better balance resources, so that no one will be occupying too much resources while others do not have enough resources. No matter “illinibucks” or “eCash”, it’s all because of higher demand with insufficient supply, if resources are sufficient, these eMoney will become useless.

If the prices are set too high, “illinibucks” would become useless because no one will want to put all their investments in one basket. At least for me, I would prefer to save some “illinibucks” in case I need them in the future. So if something is too expensive, I would prefer not to spend my “illinibucks”, only if that “product” is necessary and extremely important for me at that point. People like me might end up still having their “illinibucks” in hand at the end of the semester. This makes them miss the opportunity of utilizing certain resources they otherwise could have used. If the price is too low, “illinibucks” won’t be able to achieve its purpose of allocating resources. There won’t be much difference if you have “illinibucks” or not, people will spend “illinibucks” on all the “products” they want. The effect of “illinibucks” on allocating resources to people that need them the most would be poor. Therefore, if the university decides to implement an “illinibucks” system, they will need to do a thorough study to find out the best balance that reaches equilibrium.  

It would be even more interesting if the university could grant extra “illinibucks” to students at certain circumstances to promote certain kinds of behavior (e.g. campus service feedback surveys, some of these surveys have a low participation rate and I saw in the past many of them use luck draw and prizes to increase participation) or encourage students to attend certain kinds of events.