The Money/Time fallacy
thoughts.maayank.com
thoughts.maayank.com
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 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.
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.
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.
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.
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.
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.
"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?
Free to take time off for travel or family when you want, rather than wait for set vacation days.
And so on. Most people have some things they'd rather be free from, if they had more money.
If you already have total monetary freedom, count yourself lucky.
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.
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.
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.
Sigh.
Everybody needs a hobby.
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.
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.
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.
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.
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.
That is indeed the biggest fallacy I ultimately saw in me, friends and comments regarding this issue.
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.
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).
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.
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.
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.
Unless you were trying to go for something deeper here, in which case, please expound upon that.