Here’s an interesting econ book that I haven’t had the chance to read. Interesting enough, or it wouldn’t have made #2 on the New York Times bestseller list.
I read this post by Jim Durbin, in which he quotes this book and asks if your recruiter truly has your best interest at heart (vs. an ulterior motive).
An example using real-estate agents:
The book is really about dispelling myths by explaining how incentives drive us to act. One of the examples is real estate agents. Using some basic numbers, the book explains that a $300,000 house that sells yields a $4500 average commission for a real estate agent. A $310,000 yields an average $4650 commission. Thus the effort to hold out for the best price yields very little for the agent, but $10,000 for the seller.
Tracking the agents who sell their own homes, the book finds that the agents hold out for $10,000 more when it’s their own home, but not so much when it’s someone else’s. It’s an example of simple math. Effort matched to reward.
Now that’s a job you do for the money! Does anyone know a real estate agent that is actually passionate about the job? Someone that literally loves driving clients around showing them properties for sale, someone looking out for the client’s long term “big picture” financial health? Everybody’s other cousin and little brother is a licensed real estate agent in California.
That sounds like a job I guess I’m just not cut-out for. I can’t imagine myself convincing a middle-class couple to flip a property fast just so that I can get it over with, knowing that they could be making tens of thousands more if I weren’t so worried about losing a few hundred in commision.
I’ll sell, but not like that. Nothing against real estate agents, just an example as a reminder that it’s always useful to question the motive of others. I’m pointing out the obvious.
Other professions that could be put to question: Does your doctor get a commision by prescribing you a certain brand drug? Does your mechanic install a certain part because of a higher profit margin on that part?