By Haley Kang (Aparicio)
In Charles Wheelan’s Naked Economics, chapter 5 is all about the Economics of Information. Wheelan explains to the audience how information can have an impact on decision making, including themes of discrimination. Colleges across the U.S. are starting to become test optional, this lack of information can actually create an incentive which provides the schools with better information elsewhere to analyze character.
A great example that Wheelan gives, is the information to see people’s criminal records. If criminal records are not shown, it will lead people to discriminate by other means, including racism of Black Americans. However, if criminal records were to be shown, they will most likely not be able to get jobs putting them into poverty and influencing them to continue a life of crime. Information is important, however, stigmas against certain pieces of information might be a problem. Another time we see information in economics is consumer reviews. Information like knowing that a business has been around for a long time because of the exceptional feedback and people regularly coming in, might attract more people. Brands hold a lot of information since their reputation is known so well and consistency will help the people know what they are getting. However, for small businesses this can be very difficult since no one has any information on it, which is why branding is so important. The last example that Charles Wheelan provides, is information about being tied to a name. People might offer jobs to a student that got into a prestigious school regardless of work ethic, social skills, or efficiency purely off of a title. The same goes for company brands that decide to associate with a specific person. If that brand somehow taints their own reputation, they would also be able to taint the reputation of the people that have associated with.
Why exactly is this important? Because information can sway people’s ideas and can determine future “worth” and livelihoods. People will have to maintain how they look in front of other people for future opportunity. Many schools in the U.S. are starting to become test-optional to be able to eliminate information that may create a bias. Many students study hard to get one good test score to send to their school of choice. By providing a test option, it creates the incentive for students to look for other ways to show their skills to impress schools. This is through doing well in school and taking on leadership roles as well as focusing on things that you like rather than just the SAT or ACT.
Most of the situations that require information is to better get to know who you are, how hard you work, and how trustworthy you are. There will never be a perfect balance of information that will completely avoid discrimination while also providing enough information to get to know the person.
Bear Market 