I refuse to peg every remaining second of my existence to the highest hourly rate someone else will pay me for it. I won't say "My time is valued at $XX per hour, so it makes sense to pay $XX for someone else to do this." Valuing all time at an hourly rate is logical if a human is trying to maximize the amount of money made across their life - since you could theoretically pay for this task to be done while working, you would have more money than if you did the task yourself. Maybe you work every waking second.
But I don't. I don't want to.
I want to maximize life enjoyment across my life, not the money earned. Instead, I compare what I'm doing now to what I could be, including consequences, and decide which I'd rather do. Then I do that.
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Not to mention that money has limited utility - you can only trade it for things which currently exist, and which other people are willing to trade. No amount of money will buy you a Star Trek Transporter, nor will it revive dead people or let you live forever. It won't buy you food from the ground; you have to trade it for something else and put that in the ground, and wait a season. Most of what money will buy is boring.
You can get exciting things for money (travelling for example is not always trivial financially).
More to the point, both point of views have utility. I criticize "my time has a numerical value" in the post, but it is useful to have some metric in order to get your fair market value (i.e. in negotiations) or when you are in a period where all you want is to gain monetary freedom.
In my original draft I had the mentioned reasons titled "the factual" and I started another section titled "the existential" [reasons I find the principle problematic], where I started to delve more into why perhaps you don't want to put a price tag at all. But as the post deals more with concrete criticism and possible improvements of the application of such a price tag and assuming its existence, it felt out of place and I decided to explore it more in another post.
EDIT: also, as another wrote here you do have situations/periods in life where you may need to apply such a metric and then proper application and self-reflection is important.
Sure, I get that it is useful to realize that spending 3 hours researching a better deal to save $20 is a poor use of time. But your examples were not at all like that, and you focused on things like factoring in tax consequences, which presumes what I consider a fallacy, that one can calculate opportunity cost to that degree of accuracy for something like life.
When the iPhone App Store had just launched years ago, I saw that all of the tip calculators focused on exact calculations, even making a point of excluding the state tax from the tip. At least one went so far as to incorporate a state tax rate database! My idea was to write a tip calculator app that put things in perspective, that rounded and swagged, with the intention of making tipping and payment easy while influencing people's perspective and generosity (e.g. Just put down a $20 bill rather than $19.42 or if you're paying CC, tip $4 in cash rather than $3.91 on your card). Then I realized that by having people use a tip calculator I was undermining my own message! Anyone who is uncomfortable with "Just take the bill, divide by 10, then double, and round. If you aren't poor, be generous" just doesn't get it.
What is the cost of living an anal, money-focused life? See my other comments.
Different reasons for why the principle doesn't hold water resonate with different people. The tax issue was more about "if you already do this, beware of ...", not about why it's wrong (that's the rest of the post).
eevilspock, who is obsessive about food, the anorexic saying "I don't need to focus on food" or the person saying "there are different ways of utilizing food, I should be thoughtful which is healthier for me and for my current goals"?
There's a case to be made that being the third person who says "All my life are defined by the exact amount of calories I'm eating" is unhealthy like the first one, but saying that these are the only kind of people who gain value by food advice is a stretch.
It is useful to have a metric of how other humans value your time and ability, true. And storing enough resources so you don't have to go without essentials is just good planning. But it seems nonsensical to base your entire self-valuation as a human on that arbitrary number.
"Monetary freedom" makes limited sense to me - free from what? Free from having to be productive (to other humans in society) in order to get food and keep your shelter?
Eventually, you will come across a situation where you need to decide if you will "work" in your free time (painting your house, mowing your lawn, etc), or if you will pay someone to do this so that you can free up your own time to "maximize life enjoyment". The time = money equation isn't just about always earning money, it's about cost savings & cost avoidance as well.
You have to decide, what makes you happiest? If it is freeing up your time to do something else, then you might even pay a premium to have someone paint your house for you.
> you might even pay a premium to have someone paint your house for you.
Until paying for stuff starts to mean you have to go to work more, thus cutting into your "free" time from the other direction. i.e. you're not spending your "free" time painting your house, you're spending it working to pay someone else to paint your house.
You have to decide, what makes you happiest? If it is freeing up your time to do something else, then you might even pay a premium to have someone paint your house for you.
Exactly, ultimately these are all pathways to the same question/answer.
So if you understand that opportunity cost is in fact about choice and trade off, why did you leave out the core of the principal? Focusing only on the money in this DIY / "pay for it" argument is what make it a fallacy. If you change your car repair example so that Don makes much less per hour than the repair cost. It still might make sense for Don to pay the mechanic to do the repair. Only Don can make that choice. Anyone one else is just giving their opinion.
It's not a post about "The Only Ultimate Way to self-realization". It's a post about "given this statement I often hear, here where it works (and how to improve on it), here where it doesn't". If it doesn't work because of different reasons then:
a. Good, please contribute to the discussion
b. Different reasons resonate with different people. Therefore someone's "core of the principal" isn't the other's.
There is a clear definition for "Opportunity Cost". It's an accepted principal with a long history. From my other comment, I was under the impression that you were not aware of it. Maybe you still aren't. My point is, you are creating the fallacy in your argument by not acknowledging the entire principal. Your use of money as the only driver in the personal decision provides a false conclusion to the "statement you often hear". The conclusion you left me with is: given you're a "High Paid" engineer, you should not fix your own car or help out your community restaurant because the math doesn't work out. However, if you want to screw around with "non-billable" tasks, that's cool, you'll just pay for it.
As almost everyone here has pointed out, that's just NOT what the concept of "Times is Money" is about. BTW, the different reasons ARE the core of the principal. Of course people are going to make different decisions. But, I guess for you it only works when Billable hour > cost of item.
If I may pitch in: since you're trying so hard to throw around opportunity cost, there are, believe it or not, a couple other important points to consider here.
The first is that all valuable things can be measured in terms of other valuable things--including dollars. Opportunity cost tradeoffs of all types can be mapped onto a tradeoff for some quantity of dollars. All things can therefore be measured in dollars, even if you want to be silly and peg the value of things like "true love" as infinite--that's equivalent to infinity dollars. Your time is measurable in money as well.
The second point follows from something either you or someone else noted before. Eventually, paying for things that aren't worth your times adds up, and you have to work more yourself. That's the point! If you can earn more in an hour at work than you would have "earned" by spending an hour painting your house, you make money at no additional expense of time or effort. Alternatively, you could make the same amount of money as you would have gained in house/aesthetic value from painting the house, but spend less time doing it since you are more efficient at work: a time savings. Now, it isn't easy to just "work an extra hour" and get paid for it, but if you make these decisions constantly and trade more time at your job for paying other people to do stuff that isn't worth your time, you'll amass enough saved time to increase your work schedule by a reasonable block.
The key to understanding all of this is that you want to say that the concept of opportunity cost extends beyond money, which it does in a sense--but in another, since all things can be measured in terms of all other things, all opportunity costs have equivalent dollar costs. And so knowing your personal per-hour opportunity cost in dollars is a great way to get a basic quantitative idea of what things are worth your time. If spending an hour with your family is worth more than the $33.74 an hour equivalent that you make at work, it doesn't mean that spending time with your family can't be quantified in terms of dollars; it means that it's worth more than an extra $33.74 but is otherwise difficult to quantify.
And curiously, let's say you reduce your working hours down to 30 a week, the bare minimum you can have to live modestly but comfortably, and spend all the extra time with your family since you love them so much. But why not reduce the hours to 29 a week? Losing that $33.74 every week would put you below the threshold that everyone is happy at. That means that now, $33.74 is worth more than spending the extra hour with your family. In essence, this example shows that the fact that people go to work at all demonstrates how dollar values can outweigh "immeasurable" things like sentimental values, and since they can outweigh, they can be compared, which means that sentimental values have a relative value to marginal dollar value increases or decreases. Therefore, sentimental values can be translated to dollar values. This is a specific case of the general principle noted before, that all things can be measured in dollars, and so it's no sin (and in fact quite handy) to use your dollar/hour opportunity cost liberally when making decisions on how to spend your time.
Really excellent writeup. I think many people are squeamish with the idea of "personal opportunity cost" also because in their experience "personal numeric value"==easy unhealthy way to measure (seemingly) one's worth and to compare two individuals value ("I earn $10/H more so I'm better than him/He earns more so he's better than me"), which can be unhealthy. But it should be approached with as little ego (in the self-worth sense) as possible and as a tool you can use to better self-reflect on your life and your decisions.
Definitely. It's understandable why people dislike these sterile scientific considerations of very real and human problems, but they're incredibly useful. Though romantic notions of things transcending dollar valuation are well-intentioned, they shouldn't get in the way of that utility.
Sadly this article about the value of your life is written by an accountant, or at least someone who sees things as a bean-counter does.
What about the intangibles that Don Draper might get by working on his car? What is the value of joy? What is the value a Zen experience? Of reconfirming once in a while that you can go beyond being a highly specialized cog in a machine fueled and greased by money? Or developing a bond with the thing that you spend much of your life in and tirelessly shuttles you around (Ever read Ursula K. LeGuin's Left Hand of Darkness?).
And Rory: There's a reason she was inspired with the idea, maybe something emanating from her soul. Also she eats there frequently... the place is part of her community, her village. Part of the problem with our world today is that we treat everything as business.
I agree that the non-monetary aspects were missing from the article. However, the point of the article that, even if you purely look at the monetary value, most people get it wrong by overestimating the value of their time. This, along with the other benefits you mention, all lead to the conclusion that we should be doing more for ourselves rather than outsourcing.
That being said, does anyone actually fall into is "fallacy"? There have been a few articles lately (at peast this and the "worst argument in the world" one yesterday) that seem to assume the reader has no grasp on logic. (paraphrasing: did you see the mistake these fictional characters made? If not, don't worry little person, I'm sometimes dumb too...). This comes off as a bit self-righteous.
Sadly this article about the value of your life is written by an accountant, or at least someone who sees things as a bean-counter does.
This assumes he holds that exact idea to which he replies in the article and that he holds it true to all things in life.
At some point you do need to face outsourcing a chore or doing it yourself. I for example see no learning/entrainment value out of cleaning my apartment for the millionth time or to battle with transporting heavy & bulky furniture. As said in the last paragraph, if you prefer to make a non-monetary decision then sure, do it, just be conscious about it and don't blindly follow a false (or a very nuanced) principle.
But that's not what your article was about! You weren't pushing a rough awareness of opportunity cost, you were saying that it's a "fallacy" because in most cases you can't calculate it down to the penny. See my other comments.
I for example see no learning/entrainment value out of cleaning my apartment
What about the value of a less stratified society? Ever see Metropolis or read Brave New World? Ever live in a country like Brazil or India where the moneyed have servants to do everything from cooking, driving (few in India drive their own car!), and even raising their children? Yes, I want those people to have jobs, but no, I don't want to live in a world like that, or anything like Metropolis. And I don't want to be so elite and spoiled that cleaning my fucking toilet is beneath me.
I make well into 6 figures, though I just quit that job and will likely make much much less to contribute something better to this world than I have been, something better than what pure and cold capitalism has been telling me is valuable.
First, relax. No need for name calling (in your earlier comment), no need for getting overly excited with exclamation marks. Maybe there's a case to be made for better authorship and I welcome feedback, but as an honest suggestion please read http://www.paulgraham.com/disagree.html. It is very helpful as a guideline for making constructive criticism.
Second, different reasons for why the principle doesn't hold water resonate with different people. If it doesn't resonate with you because some other reasons seem to you more profound then please add to the discussion (as you've done in different comments), just be wary to do it well even when very passionate about the subject.
"Written by an accountant, or at least someone who sees things as a bean-counter does" is not "name calling". It's an accurate expression of my reaction, which is a fair characterization of the voice of your article. Though PG is not god, feel free to ask him.
It's certainly no worse than "overly excited", which is a pretty lame dismissal of both my points and my passion. The exclamation point was incredulousness at your non-sequitor, you being the author of the article and the instigator of this whole thread.
Well said. I personally get a great deal of satisfaction tinkering with my car (or brewing my own beer) even though if I could put those hours to productive use I could earn more money than it would cost to pay for the repairs (or beer).
I agree 100% and would even expand the idea a little further.
Let's say I make $100/hr at my job.
My car breaks down, and it's only $80/hr for a mechanic to fix it. Seems smart. Now my deck needs repainting, and it's $30/hr for someone else to paint it. Gardening? $20/hr. Washing machine broken? $50/hr. Daycare? $30/hr. Housecleaning? $30/hr... etc. etc. etc.
Because I'm a Software Engineer, pretty much every service in the entire world costs less per hour than I make, so following the logic, I should be paying someone else to do everything in my life for me. I should get someone to cook for me, drive me to work, and brush my teeth.
All of this assumes I can go to paid work an ever-increasing amount, which is obviously not true. The amount of hours I can work in a week is fixed.
UPDATE: Something else the article doesn't mention is that not only is the actual cash-in-hand dollar amount less due to tax, you should also consider the expenses required to earn that money. Transport, work clothes, work lunch, daycare and even rent/mortgage# must be paid simply to go to work. And those expenses come off after tax dollars. The amount you get in your pocket at the end of it all is a lot, lot less than your hourly rate.
#I say rent/mortgage because if you didn't have to go to work, you could live in a tiny little town somewhere paying a fraction of the rent/mortgage you are now.
Transport, work clothes, work lunch, daycare and even rent/mortgage# must be paid simply to go to work.
I disagree on work clothes and rent, and transport to some extent. You must wear some clothes and have some shelter, and you eventually will need to travel somewhere, even if just to the store for food.
I partially agree, but would take it a step further -- your time actually has zero value in and of itself. Because we have companies (or clients) paying us a salary that takes up a portion of our time, we tend to think in those terms, but it's not the correct way to think about it. The end goal of that work we do is not to make money. Money is not a goal in and of itself (or if it is, priorities need to be shifted). The end goal is hopefully a happier, more productive life, which money (sometimes) helps us to obtain.
I work 40 hour weeks so that when I'm not working, I am able to focus 100% on my family and self. By working a job, I can (nearly) guarantee that money will solve those other problems. Leaky roof? No worries, hire a contractor. Car broken down? Call a mechanic and get on with the more important stuff. Need to paint? Pay someone.
If you take money out of the equation, it's just bartering: I do something I'm good at so that I can trade that effort for someone else doing something they're good at, and so on. The end goal is that instead of spending our entire lives worrying about Maslow-ian needs, I can spend a portion of that time doing specialized work that allows me to not worry about those things. It's a trade of quality vs. quantity.
My first question when considering outsourcing a task is this: is it a chore or a project?
A project is some usually non-recurring task in a field that I enjoy and/or would like to get better at. A chore is some usually recurring task in a field that I either don't enjoy or see no need to improve my skills in.
My advice is to outsource chores (to the extent that you can afford) and prefer a DIY approach to projects (to the extent that you have time).
Chores can usually be outsourced at a profit, since they can often take advantage of economies of scale (e.g. a lawn maintenance service can afford really nice mowers that work even on long or wet grass and that do the work of two or three push-behind mowers).
It's a good guidance but I think it's more complicated. We would all like to have a zen-like efficiency at all times and do such projects whenever we have free time, but in reality it is usually far from that.
I think most people would agree they have a bulk of time where they procrastinate and it would've been more helpful (even on a strict financial level) to just do the chore yourself at that time.
Further - it's been said before - when it comes to time -vs- money - you can always find a way to make more money if you need it - but what you can't do is make more time - time goes by whether you use it or not. If I have a choice between playing with my kids and turning down some overtime, which pays very well, I'll take spending the day with my kids. That time can't be replaced later. Odds are I can always work more.
You get one life of unknown length - choose how you spend your time wisely, not by some simple formula.
Further, if I do want to do consulting work after work, it's certainly about how much I'm going to get paid, but it's also about what hte work is, how interesting it is, who it is for, and what the other network benefits might be. I won't generally work for free, some people I've charged an arm and a leg simply because I know they need it, I know I'm in a unique position to help them, and I have no vested interest in whether or not they take my offer - my personal time is valuable to me. If I had enough offers for work at high enough pay to make me really think about eating it all up, I'd quit my day job and just do that.
I think (as the user 'grecy' mentioned in another place) that as a population, programmers are in a relatively unique position. They (we) can be in a situation where there are a lot of clear opportunities to make more money given more time investment (that can't be simply said for a coroner or a florist for example) AND having it being a lot of money. Couple that with that that it's true from a relatively young age (out of college) and it gives you some pretty interesting (blessed) challenges.
Your Money/Time principal has long been defined. It’s called Opportunity Cost. You have experienced this principal your entire life. In many cases, especially as we earn more, this principal tends to involve money. However, it’s really about value and the decisions we have to make in life.
As far as how you express it, your conclusions are a bit off. The method by which you earn money (hourly, salary(taxable or not)) has no bearing on the value traded. Additionally, both time and money are finite, therefore a tradeoff must occur. This is true no matter your ability to work more or you’re a billionaire. In your approach to this idea, you’re assuming some kind of concrete, always balanced, equation. While this is more true(and easier to see as balanced) when opportunity cost is applied in business (outsourced factory can make widget X in bulk cheaper), this is almost always false in life situations like you describe. There are just too many variables. Skill, willingness, enjoyment, or necessity as just a few of the intangibles that factor into the decision.
From an Entrepreur's perspective, time should be measured by calendar-months and be the primary optimization. Focus on efforts that will slash months from your company timeline.
Distraction is the real cost of a car breakdown: missing a meeting, finding a mechanic, bringing the car in, answering the mechanics phone calls, picking the car up according to the mechanic's hours, etc. Repair bill? Lost in the noise. If you're really optimizing, you live walking distance from the office to avoid distracting risks like this.
One reason to consider fixing the car yourself is to accomplish a fully engaging distraction as a break from work, the sort of thing that can lead to creative breakthroughs. If you can schedule it at the right time.
I have preached this for a while too. Time is worthless, it is up to you to maximize its value by making decisions to increase income or reduce expense.
How old are you, by chance? I imagine this sentiment is something that goes along with the younger of our group, as they haven't already spent much of their time to realize how little the probably have left, compared to the older of our generation that may have gone through a mid-life crisis, or are in the midst of one or are having those initial thoughts on the horizon. I imagine parents that want to spend time with their children also have a different perspective when it comes to "time is worthless"...
Unless you were trying to go for something deeper here, in which case, please expound upon that.
But I don't. I don't want to.
I want to maximize life enjoyment across my life, not the money earned. Instead, I compare what I'm doing now to what I could be, including consequences, and decide which I'd rather do. Then I do that.
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Not to mention that money has limited utility - you can only trade it for things which currently exist, and which other people are willing to trade. No amount of money will buy you a Star Trek Transporter, nor will it revive dead people or let you live forever. It won't buy you food from the ground; you have to trade it for something else and put that in the ground, and wait a season. Most of what money will buy is boring.