Economic Analysis of Where to Live
Economics is a social science that studies how people make choices based on the available alternatives. It proposes a scientific approach to the determination of options from several alternatives, with three central concepts: opportunity cost, scarcity, and choice. Scarcity examines the fact that our resources are limited hence often collide with our unlimited wants. In order to make a choice, we have to give up another alternative. The opportunity cost examines the worth of the best alternative forgone when making a choice. There are also four principles that determine the choice of an individual. In essence, individuals face trade-offs, the cost a thing is what one gives up, apart from price, to get it, rational people think at the margin, and individuals react to incentives. Using these concepts and principles, I will analyze the alternatives I have about where to live once I am done with my studies: either in the city or in a small town. My objective will be to find a place that will be efficient in terms of cost of the apartment, availability of apartments, size and types of the apartments, and proximity from my workplace.
Based on the first principle, people face trade-offs, there are several things I want yet will have to give up with each choice. Living in the city and living in a small town can be completely different from each other. While living and working in the city, I will have to forego the small-town life that is characterized by a slower-paced life, bigger living space, fewer crowds, fewer crimes, lower cost of living, more infrequent traffic, cleaner air, and a close-knit community. While living and working in a small town, I will have to give up the city life that is characterized by more job opportunities, lots of places to visit and a lesser cost of transportation. In this case, by living in the city, I will be trading off more of the things that I prefer about life in a small town.
Based on the second principle, also known as opportunity cost, by choosing to live in a city will have the opportunity cost of what a small town offers. The size of apartments or living space in small towns is larger hence more spacious. The prices of the apartment will also be lower. The commute to work in a small town is shorter and less tedious as there is little to no traffic. The time it takes to also go to work or move around in a small town will be shorter; hence a lot of time will be saved. Furthermore, I believe the city life can manipulate the integrity of an individual more than small city life. By choosing to live in a small town, my opportunity cost will be the cheaper public transportation to and from work as I will not be required to have a personal car to move efficiently. Moreover, there is the availability of job opportunities that promise higher pay and the offer of more work and life experiences. I will also be foregoing the proximity of hospitals and the availability of better medical services.
Based on the fourth principle, people respond to incentives. The incentives of living in a city are the various places of entertainment that are available, the opportunity of earning more money. The incentives of living in a small town are the spacious living spaces that are made available at a relatively lower price. Their less traffic is also an incentive as no time is wasted. Moreover, there is more job stability as the relationships employees have with their employers improve their job certainty.
Using the principles of individual decision-making, I will be trading off more of what I want by living in the city than in a small town. Moreover, the opportunity cost of living in a small town are lesser than those of living in a city while I find the incentives that a small town offers more appealing than those of the city. Therefore, I would choose to live and work in a small town than in a city.