A Case of Behavioral Economics

The reason why my family and I moved to Maine sixteen years ago was not the result of the traditional rational decision making process taught in economics and business 101, it was more down the line of behavioral economics, a theory of economics that contradicted rational assumptions of human behavior, and that recently earned Richard Thaler the Nobel Prize in Economics. I wanted to share this as a means to emphasize how important it is to market our state to future generations in a more effective and efficient manner, and suggest that policy makers should move away from traditional views that claim that humans are wired to make “rational” decisions.

Our decision was “irrational,” but in a positive way, at least from our perspective. There were family members and friends that thought we were crazy for giving up our good paying jobs in Houston in exchange for starting all over again. How could we give up the “good” life and stability offered by a cosmopolitan city full of cultural and entertainment richness? How could we leave behind a six digit household income for a graduate program at the University of Maine in addition to unemployment for my spouse? How could we, in our early thirties, be willing to throw away our professional careers and start from scratch?

Doctor Richard Thaler has dedicated his academic career to the understanding of decision makers like us. From a traditional capitalist perspective our decision to leave Texas and move to Maine was “irrational;” it contradicted the assumption that humans pursue wealth, income stability, and material happiness. From the perspective of standard economic views, clearly expressed to us by some of our friends and family, we were supposed to be happy because we were making good money, had secure corporate jobs, a suburban house, two cars, and access to the joys of the material culture that surrounded us.

To their surprise, and that of traditional economists, we were not happy. We had a biased view of the world and a set of priorities that were constructed from our experiences growing up in Bogotá, Colombia, and also Brownsville, Texas, in my case. While my wife had completed her undergraduate studies in Bogotá I had had the opportunity to study in a New England university and experienced the East Coast; I always loved this part of the world. Hiking, trekking, and camping in the Colombian Andes Mountains had brought us closer to nature, and it was one of the most difficult things to leave behind when we moved to Houston.

We made a decision to move to Texas because, as an American, I thought that the “rational” choice was to move to a metropolitan center that could offer us a clear chance to achieve our own American Dream. Houston was bubbling with job opportunities and that was the place where we needed to be. In our “rational” decision making process we forgot to weigh it against other measurements such as quality of life; and Houston did not have much of that. Nevertheless, money was good and that was all that mattered. Everything quickly changed with the birth of our son; he completely forced us to change our priorities. I could argue that he made us “irrational” economic beings.

Photo: Santiago Tijerina

Although Dr. Thaler would interpret our behavior as “irrational” for moving to Maine, I would argue that our decisions were rational, and that we simply placed our focus on quality of life. We were impacted by cultural, social, and individual biases that weighed our priorities differently. We in the western world are just beginning to place value on non-material wealth; for example, clear air, clear water, safety, peace of mind, nature, love, family, neighbors, community, and leisure.

Three weeks after our son’s birth my partner’s maternity leave was over and we had to make the “rational” choice of leaving him in a daycare near our home because I was not authorized to take time off in order to help take care of my child. After leaving him at seven in the morning in order to venture into our fifty mile commute to work in downtown Houston and returning back to pick him up at six in the afternoon after fighting heavy traffic, we decided to make the “irrational” decision of reevaluating our options and our priorities. Were our salaries worth more than the comfort and nurturing of our child? Rational economic thinking would argue “yes” but we opted to say “no.”

The next day my wife quit her job while I began applying for graduate school in New England. We wanted to move to a place that was the complete opposite of Houston, a place with the highest quality of life, from our perspective. To make the story short, five months later we had sold the house and most of our furniture. In January of 2002 we were settling into our tiny rented third floor apartment on Main Street, Orono. I was making pizzas at the Bear Brew while my wife looked for a job.

Photo Santiago Tijerina

I can still remember the joy of watching the snowfall and enjoying all the tones of blue, silver, and white across the landscape. We had moved to a beautiful place, we were so happy to have made such an “irrational” choice. The life that we started in Maine did not have a monetary value; it was priceless.

We had lost most of our income but we were breathing clear air. We had sold most of our material wealth and in exchange we gained the opportunity to live in a very safe place, perfect to raise a child. Our loss of income did not compare to the peace of mind that we gained. We could not believe that we did not have to lock our doors and worry about crime; this was invaluable.

Photo Stefano Tijerina

Soon my wife found a job at the University of Maine and that fall I started my graduate program. We had exchanged our fifty-mile commute for a twenty-minute bike ride. We had “sacrificed” the possibilities of enjoying the countless options of metropolitan life for a walk in the woods, an encounter with nature, and the opportunity to become part of a community.

We still wake up every morning thankful for our “irrational” choices and priorities. Over the years we have visited several continents and travelled extensively only to remind ourselves that we are very lucky to live here in Maine.

Quality of life is what the administration should be marketing across the country in order to increase the state’s demographic growth. The target should be Millennials, Generation Z, and other future generations that have priorities and lifestyles that fit the quality of life offered by a place like Maine. Our state may become a hub for the future global citizens that want to be mobile but still have a comfortable, affordable, and enjoyable place that they can call home. Instead of marketing the state to big corporations, it should be marketed to young entrepreneurs, and instead of offering TIFs (Tax Increment Finance) as a tax incentive that at the end takes away from our communities we could invest in young people, eliminating their student debt and investing in what they want. Let’s empower them to build the Maine that they envision in the future.

The rejuvenation of downtown Bangor and the end of the sprawling mall illustrates my point. Small businesses and not big business were the engines of change, and what a tremendous change; all in the effort to enhance the quality of life that we value. Let’s focus on the future ways in which we can preserve the peace of mind that we enjoy today and help future generations build their lives here in Maine.

Stefano Tijerina

About Stefano Tijerina

My name is Stefano Tijerina and this blog’s objective is to connect Maine’s social, environmental, economic, cultural, and political issues to the global system, centering on how the local impacts the global and how the global impacts the local or what is known in Global Studies as the "Glocal" effect. In our present era of globalization it is crucial for the general public to understand how the new dynamics of the international system impact our lives here in Maine and how our local decisions impact the earth.