Personal Statement

Growing up in the mission district I was surrounded by poverty and working class citizens. I attended elementary school on Treasure Island. Every morning I would ride the school bus with my friends. We would pass by the financial district and I remember wanting to be like the people I saw walking down those streets. I wanted to one day walk around with my business attire and leather black bag. While I observed all these professionals head to work, in the background I would hear my friends talk about their goals. Some of these children aspired to be hair dressers, house cleaners and cooks like their parents. They would completely ignore everything that I would observe. This is when I realized that I wanted to be something different. This was the inception to my motivation.

As the years passed by my motivation grew stronger. It was in the eighth grade when I saw my family try to build their own business. Seeing them struggle financially because of the lack of guidance triggered curiosity in me. That was when I realized that these lower income citizens didn’t have access to the resources necessary to receive financial guidance. I wanted to help out my community and family in the future with their small businesses from going out of business, but at this point I wasn’t quite sure how.

In high school I was a very motivated and ambitious student. I was very opened minded as to what I wanted to study or what I wanted my career to be. I went from volunteering for a plastic surgeon to shadowing a psychologist. I was lucky to have these fortunate opportunities in my life. After graduating high school I decided to enroll myself in a community college to further explore my options. There I took a variety of different classes that helped me see what different careers had to offer.

Throughout my college years I have always had a part- time job. This is where school became challenging for me. As I grew older so did my responsibilities. Learning to budget my finances and time was difficult but a learning experience. About a year in a half ago is when I realized what career path I wanted to go for. I was offered to be administrator assistant for a construction office. Here the controller was able to teach me some accounting and business management skills. This is when I realized that the business/finance field would allow me to help my community in ways I have always wanted to. This journey may have taken me longer to get here. My path probably had a few bumps and turns, but every experience that I have gone through has molded me into who I am now.

How Motivation is Driven by Purpose? Video

This video describes the different ways employers can use incentives to get the actions desired out of their employees. It begins by explaining that the main way incentives are typically used is to provide employers with more monetary promotions the more efficiently they will work. They discovered that this only works with work that is straightforward and hands on, but when it deals with work that requires more cognitive creativity it was completely different. People whose jobs require more creativity and coming up with new ideas or methods need a more "purposeful" incentive. This means people like to feel needed and in control, this encourages people to come into work with a positive and open mindset. This doesn't mean that their paycheck can be low, it just means that besides monetary incentives they need encouragement also.

Interview

For my interview I actually interviewed my mom. Her name is Delmy Cuellar and is a Financial Manager for the City of Richmond. Although I was hesitant on interviewing her because of our close relationship, I then realized that it was rare hearing about work from her. She started off working for a small non-profit organization in San Francisco and later decided to get involved in government work about seven years ago. The only change I have noticed over the years is the stress level compared to the non- profit organization. Working for the government is more demanding and time consuming. The following is the questions I asked and her responses

•  Could you describe one of your typical days?

It usually depends on what tasks or meetings I have pending, but it usually consists of doing analysis, reconciliations, attending meetings, making projections, billing, and answering phones and e-mails.

• 2.      What skills are required in your position day to day basis?

Skills that I practice on a daily basis are multi-tasking, managerial skills, group skills, analysis, and doing presentations.

• 3.      What parts of your job do you find most challenging?

Dealing with government officials.

• 4.      How would you say “Incentives” is involved in your career?

Incentive can be getting good feedback from government officials on the budget that has been proposed, and also getting an award for exceeding on budget excellence from different government association. This type of recognition reflects a good performance on following or having good procedures in place, which in a way creates a good reputation for the people involved in the process. 

• 5.      What kind of incentives is involved in your work environment?

The government has better opportunities to find better positions. Also positions are paid on a set scale.

• 6.      What do you find most enjoyable about your job?

Completing projects; participating with group assignments to analyze cost/ revenue or making projections.

• 7.      Are there negatives to your job?

Sometimes government officials can require a lot of information and details this means that there is in depth analysis required.

               From the experience I have in the field I can see how working for the government can be more difficult than working for a private company. She later explained that the difference between working for a non- profit organization and working for the government is that the numbers are a lot bigger in the government. The responsibilities and the meetings that she has to attend are more intense as well.

               

Introduction

Hi Everyone!

Welcome to my Blog. In this blog you will find my research on the relationship between Economics and Incentives. My research question is "How are monetary incentives involved in everyone's every day life decisions?" , this question was inspired after reading the book "Freakonomics". After seeing how in depth Steven D. Levitt and Stephen J. Dubner researched incentives being involved in our economy, I decided to do some research of my own.

My major is Accounting, in my observation and personal statement you will find how it is that I came to choose this as  my career. You will also find several article analysis on Economics and Incentives. This is just the inception of my research on this topic. You will find through my reflections that it was a difficult process, but definitely a rewarding one.

Thanks,

Gaby

Reflection 2

In the beginning of the semester I felt like I was all over the place. I already had a hard time being creative with my writing and when I found out that we were going to write about our careers I got discouraged. Finding articles in Accounting that were interesting to research was difficult.I kept finding controversial methods on recording data, and because I was still learning the basics of Accounting I found it hard to understand. Even then I almost started doubting my career choice because I couldn't finding anything intriguing to write about.  It wasn't till I started reading "Freakonomics" that I finally realized why I was studying Accounting. 

Reading "Freakonomics" and researching further as to how incentives and economics go hand in hand made me realize why I wanted to study Financial Accounting. Not only did this research help me in writing this blog, but also in my personal life. I felt like I was losing drive on why I was going to school and what I was studying for. This regained my passion for my career. It made me reminisce on what it is that I love about my current job and why I am working hard to go to school. 

Incentives Matter

http://www.econlib.org/library/Columns/y2006/Robertsincentives.html

This article basically explains how incentives can be about monetary or not monetary. He explains that in the 1790's England began sending convicts to Australia. The problem was that 13% of them would die because of disease and overcrowding on the boat. They suspected that the captains on the boat would keep the medicine and food provided from the convicts and sold them in Australia in exchange for money instead. They offered these captains money for every convict that made it to Australia and everything changed completely. There were no convicts dying from that point on. An example that they used for non monetary incentives is if they tell people that the Beatles are reuniting and that concert will take place at a small theater in town. The catch is that the concert is free, this then becomes a problem for people. They begin to think of the struggle it will be to get in because of the capacity. The incentive in this case is not high enough because the guarantee of them being able to see the Beatles is low.

This article explains the importance in incentives. They explain that incentives does not only come in the form of money but that there is also psychological incentives. I know that when people tell me that Baskin Robins is giving away free ice cream cones, but that the line is down the block. I would rather pay and wait less, then to wait in a huge line for a long time. Time is money in that case. I could be doing something more useful with that time. In the previous articles all of the incentives had money involved, this one had different scenarios. Although some incentives are not monetary, they still come down to making monetary decisions at the end.

Incentives Cartoon

This cartoon is stating two incentives. The first is that giving people welfare works as an incentive to help people not want to work. Basically instead of helping people out they are giving them a reason to not look for work. On the other side it is say that they also do not agree with giving the wealthy tax breaks, and leaving the less advantaged with more taxes to pay. 

Give and Take Cartoon

This picture shows how incentives works in the government system. Basically the picture is trying to explain how they give the rich incentives such as tax breaks, bonuses, stock options, and privileges in exchange for their cooperation. Cooperation meaning contributions. On the other hand they show on the left side them the government taking away food stamps from those in need. 

My Observation

For the past year and a half I have been working for a small construction company helping out in the administrative department. With the responsibilities that I was given I was also able to learn and contribute to the accounting department as well. Being involved in the financial side of the company has made me see that incentives are highly involved in the revenue of the company. The way the company makes profit is based on the amount of jobs they can get. Therefore getting jobs is a betting system, almost like gambling. Whoever has the best price and resources win the job.

               The process of bidding a job is exciting and stressful. It’s all about getting the best companies to support you in this bid. Getting these companies to be on your side is the best part. You have to persuade these companies with incentives to work with you. Seeing the way the company depends on other small companies and job bidding's made me realize that their revenue is based on what they have to offer. The moment of truth, the moment you sit down and declare the prices your company can offer is exciting and scary.

               My first bid is what caused me to love construction accounting. It can be very stressful at times, but exciting. Sitting down with the estimator of the company and delegating the numbers with that person is what caught my attention. I’ve always liked the feeling of being in charge. Seeing the controller tell him his budget and how the company’s revenue could increase if we got this job was nice. I was able to go to one of the bid meetings; it’s a huge room full of several general contractors. Every one of these general contractors is also bidding for this job. They all present this envelope that contains their proposal to the person in charge. Basically the lowest bidder wins, there are always other specifics involved with the decision making but for the most part that is the main one. The moment they told us that we were the lowest bidder was exciting. Walking back to the office and celebrating a win is what started my curiosity in construction accounting. 

The Uselessness of Economic Development Incentives

http://www.citylab.com/work/2012/12/uselessness-economic-development-incentives/4081/

The author argues in this article that the incentives that these states, cities, and counties are giving to these companies are a waste of money because it isn't an effective mechanism to lure these companies into choosing them. This comes into the perceptive of the previous article, sometimes incentives can pause the economic development and improvement of a company. In other words these incentives weren’t benefiting anyone at the end. The only correlation that they were able to find is that the communities that provided these incentives to companies were the ones that were economically in need. While incentives in the business world can work, it can also backfire. The incentives have to be hand in hand. In the end if these communities do not have the qualities or resources that these companies need in order to succeed their contributions go to waste.

            Incentives are almost always involved when making business decisions. In the case stated in this article I believe that the states, cities, and counties funds are being depleted if they do not have the resources these companies need. In order for one to offer incentives one has to be sure that they have other qualities to offer that can help the other party in the long run. In the case of these communities it is hard to say whether their incentives were going to waste or not because of the lack of information on their economic state and resource’s available. In their case they are giving incentives at their own risk. On the other hand for the company it can be just like the article stated above. The more revenue these companies see coming in the less work they put into improving themselves economically. This in turn causes no employment growth in the long run. Incentives are to be used wisely. 

Money Over Matter: Can Cash Incentives Keep People Healthy?

http://www.scientificamerican.com/article/can-cash-incentives-keep-people-healthy/

The article explains how giving people money incentives can improve their decisions in certain areas in life. They tested a few different areas in life such as losing weight, quitting smoking, and exercising more. While these are areas that can definitely change people’s lives in a positive way and also areas that people struggle with I am not sure that giving them incentives such as money is the best way to encourage them. Although psychologist argue that after a certain amount of time these people take their life changes semi- permanent, the end result would go back to the way they were because the incentive isn’t there anymore.

            Incentives can be a good thing depending on how they are being used. The way this article uses money as an incentive to make people change bad habits in life can turn into a bad habit. For example if one gave student’s money to do well in school the results would only be short-term. What happens after the incentive is gone? The student never learns to discipline themselves into doing well in schools. Same goes for losing weight, exercising, and quitting smoking; the result will be long term once the person finds self-motivation. Using money as an incentive should be limited to those who are at a high health risk. 

Reflection 1

Economics is something involved in our daily lives. An incentive is something that is involved in our daily lives, but I didn't know that it also tied into economics. I learned that incentives can be a good thing and a bad thing. In the business world incentives are natural to use. In one’s personal life it can get a bit tricky. Using money as a motivation to do something can be deceiving. Once the money is gone one is more likely to go back to their old habits.

            Some of the difficulties I faced was choosing my topic. Accounting is my major and although I like to practice it, it is hard for me to describe it. I wanted a topic that interested me but that was still within my major. It took me some reading and researching before I was able to find these articles that linked incentives together in with Economics. In reality I took very long to get this paper together. I went through many different topics and failed to find articles that sparked interest or inspiration for a paper. After reading the book ‘ Freakonomics’ my eyes completely opened to other topics that didn’t cross my mind before. That is when I discovered how heavily ‘Incentives’ is involved in economics.

            The next time I approach a paper like I this I will be more patient with myself. I got very frustrated and discouraged with the topics in my career. This has definitely taught me to think deeper than just the surface area. I wasn't thinking out of the box, I was only thinking of the logical topics accounting had to offer. I then realized that I had more options than just that. Next time I will research areas not only within the topic I want but also outside. Just broaden my resources and mind. 

Book Review

In the book Freakonomics, two economists come together to explain the way our society’s decisions are linked together with economics. They explain how real life situations such as violence or criminal acts might have had a clear solution to them, but that in reality there was a completely different solution. They make you think deeper into the decisions society makes to solve problems we deal with in our everyday lives. They explain how morals are involved in economics; how every decision that is made in our daily lives is based on incentives. These incentives always lead up to economics. They make you think deeply as to how true and genuine the decisions are that everyone in life makes.

In Chapter 1 they explain the similarities that sumo wrestlers and school teachers have in the decisions they make every day. Cheating was one of the decisions they focused on. They asked throughout the book which one of the two was more likely to cheat? They explained that every one of their decisions was based on incentives. The incentive that teachers have for their students to do well in class is that they have a chance of promotion or recognition. This can be a result of teachers having a higher chance in cheating. Sumo Wrestlers on the other hand has different incentives. Although by doing well they can receive recognition's, their option of cheating can be a bit more complicated. They are tested in their physical capabilities, cheating would only cause them to fail when tested. In the end both of their incentives is money.

In Chapter two compare the incentives that Stetson Kennedy and Real Estates have. They first explain how Stetson Kennedy infiltrated the Klu Klux Klan.  After he gathered all the information he needed he later went and distributed the information to famous journalist’s and radio stations. This did cause awareness around the country and it did fix the problem, but that’s not what the book was looking into. They later explained how his incentives weren't only to fix the problem, but also to put himself out there. This caused him a lot of recognition which also meant he was recompensed economically well.  Real Estates also have the same economic incentives when they do their work. They explain that when one is attempting to sell a house, they are looking for the best deal out there. For example if a house is being sold for $400,000 and one knows that it is possible to get an extra $15,000 out of the buyer with a little extra work and advertisements, one would want that. The book explains how a real estate putting those extra hours of work for the $15,000 isnt worth their time and money. The real estate only receives about $500 after all is said and done. In reality they are looking out for their best interest not yours. Their incentive is once again money also.

In Chapter 3 they make the reader think more deeply about an issue that was going on in the 70’s -80’s. Violence of all kinds was a problem at this time in the United States. They explain that the government as worried for the safety of citizens because of how the criminal rates were rising instead of getting better. There were several changes that were made; first the economy began to get better at the time. Also because of the economy progressing they began to add more policeman in the areas needed. The violence and criminal rates went down almost 50% over some years. People and the news quickly jumped to conclusions saying that the economy helped the situation and that so did the reinforcement of security. What they didn't know was that back in 1973 legalization of abortion was being taken into play; we didn't see the results till the 90’s. They correlated this with the violence problem. They realized that it wasn't the new policies and security that helped the violence go down, It was the fact that unwanted babies were being aborted. This meant that children that before were being born into unwanted, struggling families were now not being born.

The book goes deeply into analyzing how different situations and solutions have economic incentives. How the study of economics is all based on incentives. Most of the evidence that they present in the book is historical and available for everyone to research. For example the Stetson Kennedy infiltrated the Klux Klu Klan and used the information to spread awareness is very true. They use history, but they go deeper into analyzing their motives. In the end of each of their examples it all comes down to the economic motive that they all have.

This book helped me learn why it is that I am pursuing accounting as a profession. I learned that everyone in life has to make a decision based on their economic state. We choose where we want to go eat based on how much we want to spend. We choose where we shop based on what we can afford. This book relived my passion for accounting. It made me realize that I want to help people organize those decisions. Accounting goes beyond just analyzing and organizing numbers. It’s also about budgeting and directing people’s expenses in their daily lives. This book definitely made me think deeper as to how involved economics is in everyone’s lives. I recommend this book to anyone that is interested in learning how economics and incentives are involved in daily decision making.