Sunday, December 30, 2012

Decisions, Decisions ...

I have spent the majority of my life as a manager -- a profession whose primary responsibility is making decisions, often difficult ones.  And I currently teach in graduate and undergraduate business programs.  My expertise includes economics, finance, statistical analysis, quantitative analysis, and decision science, so it would be natural to think that deciding where to live next would be second nature to me.

If only that was true!

The decision about a new home and a new home town involves a combination of emotional and intellectual inputs.  The location must not only be economically feasible and meet my decision criteria (the intellectual part), but it must also be a place I like and will feel comfortable living (the emotional part).  As an economist, I know that both the intellectual and emotional factors can be quantified and rationally analysed.  After all, liking a place and feeling comfortable living there are basically factors of what economists call "utility".  Emotional satisfaction, even though it is chiefly subjective, is useful and can therefore be quantified in "utils" or units of utility.

In practice, the process is just a more complex version of the process one goes through when decided what doughnut to buy.  There are a wide variety of choices available:  Hostess, Entenmann's, Van de Camp, Dunkin, Winchell's, Krispy Kreme, ... as well as local mom-and-pop doughnut shops or even making them at home from scratch.  When we decide which doughnut to buy we consider a whole array of factors; not just the price.  Included in our buying criteria are such things as the flavour, the proximity and convenience of the point of purchase, the environment in which we will purchase and consume the doughnut, or whether complementary products like coffee are available.  Many people will also consider the quality, origins, or healthiness of the ingredients used, or whether they perceive the company producing or selling the doughnuts to be socially responsible.  Despite the complexity, most of us can weigh all of these factors and decide what doughnut to buy fairly readily.  That's because the risk is low!

At most places you can still get a doughnut for under $5.00 so even if you make the worst possible choice, you have risked and lost only a couple of dollars and a few minutes (or hours if you tried making your own) of your life.  But if you move to a new town and find it doesn't suit you, you are facing a huge expense and a significant upheaval in your life!

As a result, I have already amassed spreadsheets of data on potential locations:  housing costs and availability, climate data, cost of living data, crime statistics, business and employment data, social, political, and cultural information, photographs, maps, and much more.  All that data can help with the intellectual issues involved in the decision, but they are of little value in determining if I will like any particular location.

So, over the next couple of weeks I will be posting what I have learned about each location I am considering.  I hope I will get feedback and comments regarding those locations and my impressions about them so I can begin assessing whether or not I will like them and feel comfortable living there.

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