I'm worried I'm thinking/writing about this in the wrong way, so I wanted to run it by readers.
So I'm writing about undergraduate course choice right now, and one of the major issues I'm considering is the stock of courses by major that a student already has under their belt. A natural way to think about this (I think), is as Kydland-Prescott type "time-to-build" investment where the degree itself takes time to build.
I've got my own optimization problem that's different from Kydland and Prescott, and a macroeconomic law of motion for capital isn't really the right way of thinking about a microeconomic human capital investment anyway. But I want to make a reference and use the same sort of language as they do.
My concern is that when I try to articulate time-to-build I have this feeling like I'm saying it in a way that commits a sunk cost fallacy. The right way to put it - I think - is not really to talk about the optimization problem in terms of the investments that you've already made, but instead to look prospectively at how much building there is left to do (which of course is a decreasing function of investments you've already made). So I would say that when a student chooses whether to take a junior year course in engineering or English, one of the things that they consider is the amount of total investment in these fields that would be required to produce a degree in engineering or a degree in English. For any given student in any given semester, this amount of investment required is going to be inversely related to their stock of courses in engineering and English to date.
I think that's just fine. But the fact that it's still functionally tied to past investments makes me nervous. I have flash backs to a decade ago (good God - is it really a decade ago?) in my intro micro class getting it drilled into us that only dummies worry about sunk costs.
What do you all think?
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