9/10/2004

Incentives

The Salt Lake Tribune had some good and bad news for Utahns on Wednesday; the Mortgage Bankers Association reported that Utah's foreclosure rate for April-June was 1.56 percent, which is down from 2.03 percent in 2003's second quarter. Our delinquency and bankruptcy rates are down as well. That's the good news. The bad part about the report is that the rate at which families in Utah are losing their houses to foreclosure, ranks as the 10th highest in the United States.

Jeff Thredgold, an economist from Salt Lake City, claims that "Utah's ranking in terms of delinquencies and foreclosures compared with other states probably always will remain high." He says, "We have 50 percent more kids than the average American, which puts added financial stresses on families, combined with the fact that people in Utah get married younger and there's a tendency for them to try to keep up with friends and neighbors by buying a house."

In relating this to Managerial Economics, there are many different approaches one could take. Since we have been talking about incentives, and the theory that people behave rationally, Thredgold's comment about people getting married younger provoked questions in mind about what kind of incentives young people in our culture recieve in getting hitched at a young age? Don't they know they are going to be poor? It seems that the threat of bankruptcy, forclosures, and other such matters are things they might as well register for, along with other things they desire at Target or Pier 1!

So what are the incentives? Most people say sex at first. Could it really be? I don't have the answers, I'm not married. I know that many students here at SUU, and even in our small class, may have gotten married at a young age, and maybe they could help solve this mini-mystery. Is It government assistence with school? Is it truly undying love? I'm sure it depends on each specific couple, but I know Landsburg could come up with some interesting ideas.

5 comments:

John West said...

I would like to comment on the issue of young people in the state of Utah getting married at such a young age. To me the age at which Utahn's are getting married doesn't seem all that young. Sure the ages are seemingly younger than in the rest of our country, but the latest trends nationwide show that many young adults are getting married when they see fit and not when the ideal norm that people place upon societal issues is fulfilled. Take for instance Britney Spears. She is only 21 and has been married twice. Hopefully, her second attempt will be longer than the first. My point is that it is not just a Utah thing to get married at a younger age anymore.

I also find fault in the argument that because someone gets married at a younger age, that they may as well start filing for welfare along with a marriage license. One cannot explain away young adult marriages in Utah as simply just for sex. For instance many youth's out there have found that sex can also be accomplished without a marriage license. WOW, who would have thought that? A broader look at all of the issues that surround our state must be looked at. For instance, how many other states do you know of that send so many missionaries out each year from the predominant religion? Of course there is Idaho and California that contend for that title, but I believe Utah is the clear cut winner. Also, before coming home, many of those missionaries are advised by their mission president's to find a companion.

And as far as the bankruptcy issue is concerned, Utah is a very unique state. Hundreds of thousands of our fellow Utahn's give a tithe to their church. Could that not contribute to one's bankruptcy. I say it can and does.

The person that posted this blog is correct in that every couple that gets married in this state and as far I'm concerned the nation, do so for various reasons. In conclusion I happen to love this state and although it has many problems that need a thorough examination, I would rather have them than problems that plague the rest of the nation. I.E. single mothers that have five children from five different dads, high crime rates, very low standards of living (in many urban areas), and the list goes on and on.

Student 01 said...

I don’t know how young marriages affect the bankruptcy in Utah. However, I don’t think young people that get married are the cause of this phenomenon. Yes it is true that some young couples that do get married go bankrupt, but what about those who never get married and still go bankrupt. I don’t believe that those who pay a tithe to the church they belong to is in any way is responsible for the high bankruptcy rate.

Maybe it is the legal professions fault. Everywhere you turn there is an attorney that is more then willing to help a person file for bankruptcy, maybe there to blame. In today’s education system we don’t expect the parents to teach their children anything, or at least that is what all the education professionals say. Maybe it is the faults of the public education system that did not teach these children how to manage money. Maybe money management should be thrust into the curriculum of elementary, middle, or high schools just like sexual education is.

peter_parker said...

Just a thought, one explanation for earlier marriage in Utah is priority. Many young adults put marriage as a priority before degrees and careers. Even though those things are important and will happen along the way, due to beliefs and background, family is the most important element of life.

natty said...

I do not believe that the high rate of bankruptcy is related to when people get married. I believe it is a result of the moral breakdown in our society. People who file bankruptcy have usually spent themselves into a deep hole because they do not have self control. They believe that they are entitled to the same luxuries that their parents, friends, or neighbors enjoy. I believe that many people have had things just given to them and they expect that to continue when they begin supporting themselves.

It takes a lot of discipline to cut back spending and go without so that you can meet your financial obligations if they become overwhelming. Bankruptcy is the quick fix, however, it has no honor. Keeping out of bankruptcy boils down to a commitment of living within the limits of your income, regardless of when you get married.

Dr. Tufte said...

One misspelling, and one miscapitalization in the original post.

John West's comment is also missing some question marks.

Student01 made a "there/their/they're" mistake.

This is a tough issue. I don't have a good reason for the high bankruptcy rate in Utah (as high as No. 1 a few years ago).

There are things about Utah that are different that we can point to. Those are: marriage at a young age, more children per couple, and tithing.

Some things that probably don't make good explanations (because Utah has them in common with other states) are "keeping up with the Jones' mentality", and a lack of personal financial education in schools.

One thing that I have noticed anecdotally is that there seem to be a lot of small business schemes that are unsound in Utah. I seriously wonder sometimes if naive people here are being conned into these by people in whom they have misplaced their trust.

Another thing that I have seen in southern Utah is a lack of vision regarding the high end of the possibilities in a business. I see a lot of places that I feel are destined to fail because they are not reaching far enough to have a chance to cover their investment.

But, the bottom line is that I don't have any better answer for this one than some of you.