Illinibucks Program

Let’s say, the university has clear purposes on issuing Illinibucks. One goal could be solving unfair issues happened on campus, such as some undergraduate students spend four years trying to register for popular courses but still can’t get one. Also, the campus is running this Illinibucks program to bring students better academic experience instead of doing some weird things that normal universities wouldn’t do, such as holding football game one Friday or having unofficial St. Patrick Day on campus. The school realizes these problems are severe and makes its mind up to maximize students’ welfare prior to maximize its own profit. Without these proper purposes, there is no reason that the university wants to circulate Illinibucks, and students wouldn’t bother to give Illinibucks a try.

Few problems that administrators want to solve by issuing Illinibucks. Firstly, administrators hope that limited course spots are taken by students who are most willing to take those courses. To solve this problem, Illinibucks can be used to jump the line of class registration; students who show higher willing to take the course are more likely to pay the price. Moreover, the school thinks that hard-working students who wish to live closer to libraries deserve on-campus housings. In this case, students can use Illinibucks to reserve their desired on-campus housings without fearing someone could take them. The considerate school also finds that overcrowded dining hall during lunch time makes students hard to get in afternoon classes on time. So, administrators allow students to spend Illinibucks to jump the queue in dining hall as well.

After determining to solve these problems mentioned above, the school comes to the important question: how to allocate those Illinibucks? As the purposes of releasing Illinibucks are to minimize unfairness and increase academic qualities, the school try to allocate right amount to each student. If all students get the same allocation, there is no difference before and after this program; only proper allocation makes this program useful. Sophisticated algorithms might be needed to calculate the amount of Illilibucks that each student deserves. For example, I’ll take GPA as an indicator: higher GPA may mean that this student put efforts in studying and deserve more Illinibucks to register for his or her desired class. In addition, younger students should get higher amount of Illibucks since they may have tensed class schedule and go to dining halls more often than juniors and seniors; Illinibucks can save freshmen and sophomores time waiting in the long lunch line.

Now assuming that I receive my amount of Illinibucks, which is relatively lower than most of undergraduate students because I get fair GPA and quiet flexible class schedule. Also, graduate students like me can easily get the classes we want and we seldom go to dining halls, which makes those Illinibucks seems useless to me. I would rather give them out for free, or even better: trade them! Administrators are smart enough to consider this situation, so they set up an online market where students can trade extra Illinibucks for bookstore or food court coupons. The better this trade-in system designed, the better results can be achieved by this Illinibucks program. If people cannot trade their Illinibucks in an open market, this program may probably fail: people with extra credits don’t use them and people who need more credits can’t buy some, then fewer people are willing to use Illinibucks afterward.

Now, proper goals are set, allocation is given and online market is available, the school has to decide the price. If the price is too high, most students cannot afford it and decide to sell Illinibucks online. Only few students can get enough Illinibucks and jump the line they want to jump, which makes this large-scale program only benefits small-scale people. If the price is too low, those Illnibucks given to students cause inflation of the campus market. Every student has abundant Illibucks but can afford rather less valuable things, which doesn’t solve unfair problems. Either too high or too low makes this program less student-friendly. Students increase their transaction costs in terms of spending more time or effort looking for the product they can afford.

An example of setting wrong price is my credit card reward program. I have a points reward credit card which rewards me few points every time I consume something. The reward rate is quite low and prices of things that I can buy from an online store are relatively high. I couldn’t afford a single product that I want even though I have been using my card for over a year. Once I realize that the price is too high for me, I have no incentive to consume with this credit card. The reward program is similar to Illinibucks program: only reasonable price can motivate students to participate in.

Though I doubt that the school has abilities to hold a program which can take care of all students’ welfare, there is no harm assuming that Illinibucks program is held successfully. Students can sense that the campus is trying to improve their welfare, allocations and prices are calculated and given fairly, and functional market is accessible. In this case, Illinibucks program has good odds to eliminate unfairness on campus and ameliorate overall academic qualities.

Comments

  1. Professor ArvanOctober 7, 2017 at 9:56 AM

    I appreciate your imaginative post. Here are a few points in response. First, the prompt is definitely intended for undergraduate students. I gather that there are fewer things were graduate students would feel the effect of rationing. However, one of those might be an Econ 490, as I understand the average enrollments in them are higher this year. It might be that your preferred Econ 490 was all sold out. In that case, the Illinibucks would be useful to you.

    Second, you said something about the economics that I disagree with.

    "If all students get the same allocation, there is no difference before and after this program; only proper allocation makes this program useful."

    That is not right. The Illinibucks give some priority to students who previously had low priority - either because the system gave the priority to somebody else, or because it was first come first served and they happen to arrive later than others. If there are a small number of cases where people really would want priority, but they don't currently have it, then the Illinibucks can make a Pareto Improvement over the current situation. If the original arrangement were Pareto Optimal, then your statement would be true.

    I want to note something else, which you didn't consider. If students wanted to spend Illinibucks in specific areas, and if the campus had the ability to adjust supply, the use of Illinibucks might provide an indicator of where supply should expand. In general, since enrollments are growing, the university needs to know where to put its resources most effectively in managing that growth. That is a different way to adjust to the scarcity on campus.

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    Replies
    1. HanOctober 9, 2017 at 7:32 PM

      I didn't think thoroughly about Pareto Improvements but it sounds reasonable to have one if a student can get priority without hurting other students' rights. I guess that I oversimplified my assumptions. I was thinking that the number of spots is fixed, students who already get a spot cannot be replaced by students who get Illinibucks and try to buy themselves priority. In the other words, students use Illnibucks to buy priority may hurt the welfare of students who already have priority. I think I was assuming the situation was Pareto Optimal, but thank you for pointing out flaws of my assumptions.

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