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Just the other day I was thinking about why fewer people are more successful than multitudes.  Immediately a thought came to mind and without thinking even further it ignited a lot of old adages.

 

But of all the adages one stood out the most – thinking on the margin. Hard as this concept might be for a layman to comprehend, it is the substratum of everyone’s neuroeconomic perception such that a totally new area of study called neuroeconomics has emerged.

 

Working in tandem with scientists, economists are developing a new theory built around the brain’s shopping center. For convenience’ sake, economists have traditionally assumed that buyers make rational choices: I think, therefore I shop.

 

But even the most rational economists realize that the shopper’s mind is more complicated. The brain’s “impartial spectator,” as Adam Smith warned, has to duel with “the passions.”

 

The nucleus accumbens, a region of the brain with dopamine receptors that are activated when you experience or anticipate something pleasant, like making money or drinking something tasty is usually motivated by what we see.

 

So, there is another possibility economists ignored for a long time: I see, therefore I shop, as much as there is: I think, therefore I shop. People become successful in part by decisions they make in this same part of the brain concerning wealth creation and management while others have become poorer.

 

To make matters worse, there is another culprit called the insula to deal with. This region of the brain is activated when you smell something bad, see a disgusting picture or anticipate a painful shock. It is typically activated in the brains of the shoppers when they see a price that seem too high or too low, for instance.

 

A good analysis of both the nucleus accumbens and the insula leads to understanding the difference between a tightwad’s brain and a spendthrift’s brain. As the terms might suggest, the tightwads are tight with spending while the spendthrifts are loose with spending.

 

Behavioral economists think tightwads aren’t any more rational than spendthrifts, because neither group is carefully weighing the long-term benefits but instead are guided by instant emotions.

 

For tightwads somehow they won’t spend money even when they should while the spendthrifts would want to spend even though they shouldn’t – these are two extremes. It also helps to explain why we overspend on credit cards, and why people prefer all-you-can-eat buffets instead of paying for each item we order.

 

We like schemes that remove the immediate pain of paying. Real joy comes when we train ourselves to operate in between the tightwads and spendthrifts though. That balance is only struck when we learn to think on the margin.

 

Thinking on the margin is therefore the final arbiter to all this madness, nothing but. Using marginal analysis each one of us has the ability to evaluate what things cost us more than need be (marginal costs) and what things benefit us more with less (marginal benefits).

 

All rich and wealthy people realize this early enough to create and sustain affluence. Thinking on the margin will help you realize which relationships and associations will enrich your life and which ones won’t.

 

Marginal analysis works with the cost-benefit analysis and so there is no way your propensity to spend and or sacrifice would outweigh your propensity to save and or derive. When you think on the margin, everything gets analyzed and the best possible scenarios always provide the greatest good.

 

Life as a serious enterprise that requires marginal analysis at each and every stage – we are constantly being sold on something or we are constantly buying into something. That something could be a job, a career, an opportunity, a relationship or anything you want to think of.

 

When you train yourself to think on the margin, it becomes second nature to marginally analyse … the benefits are long-lasting spilling over to the next generation.  

 

Think smart, think straight, and think on the margin … you will have no one else to blame but yourself come tomorrow.

 

Live Long & Prosper; that’s this week’s memo from us at the Zambian Chronicle … thanks a trillion. 

 

Brainwave R Mumba, Sr.

CEO  & President – Zambian Chronicle

 

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