Two weeks ago a friend read my article about "Smart Places to Live," a list that ran in the June issue of Kiplinger's Personal Finance magazine. He laughed when he learned that Cora and I had to look for College Station, Texas on the map. "Do you know nothing about college football?" he asked. "College Station is home to Texas A&M University." I shrugged. He continued, "Why do you think that town carries that name?"

I felt a little ridiculous about my lack of knowledge and research skills at that moment, but heaven knows that I could care less about college football. Since that latter excuse didn't eliminate my friend's sneer, Cora and I decided to take another look at this town. We learned that College Station provided a perfect subject for a mini-lesson in microeconomics, or an analyzation of the individual people and companies that make up the greater economy:

First, humans will try to fulfill unlimited wants and needs as best as possible despite limits in income, or scarcity. When Cora and I visited the demographics section at a relocation site for College Station, we discovered that the annual median income for residents in this town currently stands at $17,228. While a person couldn't afford a house in New York City on that income, we discovered that a person could purchase a three-bedroom house on 500 acres for a top selling price of $3,628,050 in College Station. We also learned that the town of Bryan, adjacent to College Station, is booming because College Station's population is expanding. Housing in Bryan is even more appealing to that $17,228 median income, as home prices range from between $22,000 to a "median listing price of just under $140,000" for in-town homes.

Resources aren't limited to money, however - skills and time also influence how people satisfy their wants and needs. Low housing costs would appeal to someone with limited income and time (retirees), but we also wondered how people earned their money in this area. This inquiry might answer how skills fit into the "scarcity" equation here, so we looked at the PPF, or Production Possibility Frontier. The PPF allows us to determine how an economy can allocate its resources in order to achieve optimal output. Accordingly, it can help us realize how a local economy provides jobs for its residents with this optimal output goal.

The university would provide income for professors and librarians, among others. We also learned that Texas A&M is a Land, Sea, and Space-Grant institution, which means that this university brings a broad range of research opportunities to this town. Therefore, scientists and researchers are paid through ongoing projects funded by agencies such as NASA and the Office of Naval Research. This funding could alter how the annual median income appears on paper?funding might allow this university to house researchers, so these individuals would then have more discretionary income. In other words, $17,228 median income per year might now reflect income that isn't affected by housing costs.

Expansion would also open this area for more business, as demand would allow for supply and competition. Housing for added employees also defines the law of demand and supply in this area. As mentioned previously, College Station's population has increased (67,890 in 2000 to 81,699 in 2005), so Bryan has become an extension of this community. Demand and supply refer to the relationship price has with the quantity consumers demand and the quantity supplied by producers; therefore, more demand for affordable housing actually would increase prices in College Station, and increased prices would drive some residents to areas where cost of living is lower, like Bryan. But, this would also mean that quantity of housing would increase in College Station as well as in Bryan.

This demand-supply equation brings us to elasticity, or the theory that tells us how much quantity demanded or supplied changes when there is a change in price. College Station and Bryan probably will become one town more or less as expansion continues (they're only five miles apart), because expansion in both areas makes the cost of living in these areas elastic. People who move here will find more jobs as the towns grow, they'll find their cost of living levels, and they'll make the time to fulfill needs and wants within a realm of total utility.

Economists use utility to determine how an individual can get the most satisfaction out of his or her available resources. One look at the College Station area as defined by Wikipedia shows that any given individual could find a way to fulfill utility from a variety of goods and services. This fact makes this area ideal to meet a variety of needs and wants (including a supply of public transportation that helps to cut gas costs).

Finally, if we relied solely on Kiplinger's research that stated retirees and families preferred to live in College Station rather than singles and young couples, we would have missed out on the fact that, in 2000, 51.2% of the population ranged from 18 to 24 and that 58.0% of the College Station population consisted of "non-families." These numbers illustrate that College Station seems to be a vibrant, young, college town that offers a range of living situations for other individuals, such as retirees and families.

Mind you, Cora and I aren't pushing College Station as an ideal place to live. What we learned was that statistics are limited and that added research is important in any given situation. Additionally, when we apply the theories of scarcity, PPF, demand and supply, elasticity, and utility to our research, we can learn more about a situation. Cora, for instance, was drawn by the fact that College Station contains more young men than women (104 to 100 respectively). This latter discovery goes to prove that economic theory means different things to different people?

Until Next Week,
Linda Goin