The Economics of Time
Sometimes, to truly understand the most complex things, you should first try to understand the most basic. Time is something we take for granted, because it is something that tends to always be there, and when time is not there – well, you don’t notice. This is an elementary study on time, things will be taken for granted, and in some instances complete subjects will be ignored. This is intended for a novice audience.
Time is a huge part of economics. Whether it be at the forefront, or the background, it doesn’t matter to time because it’s affect can’t be diminished. If this all sounds very abstract, that is OK, because this subject is a very abstract one. We will do our very best to be as clear as possible.
Without delving too far into the abstract we will attempt to discuss this subject by breaking it down into about a few parts. The first part will be about valuing your time, the next 3 parts will be categorized as “Winning with time” and the last section will discuss losing with time.
- Valuating your time
- Winning With Time:
- A single high hourly wage
- Many lower, average, or high hourly wages
- Using other peoples’ time (including technology)
- Hoarding your time
- Losing with the time
Valuating Your Time
A problem that people arrive at is figuring out what their time is worth. There are two aspects to look at:
- What is your time worth to you
- What is your time worth to others
Your Time’s Value To You
Unless you have low self-esteem, it is almost guaranteed that these numbers will be different, and #1 will have a higher value than #2. When trying to value time, I like to suggest the “deathbed scenario.” If you were on your deathbed, how much money would you be willing to pay for one more hour on this Earth?
Obviously mileage will vary based on your experiences and outlook on life, but generally, the number would probably be quite high. This is a good way to evaluate how much you value your time. Not to burst any bubbles, but few people will ever earn this amount of money, but it’s a great starting point to look at where you are currently, and where you should be.
There are some other dynamics to valuing your time that we won’t include here, such as: some may argue that because you don’t wake up every day, thinking it could be your last, that you don’t value your time as highly as if you were on your deathbed. That may be true but it exceeds the scope of this article, we are just talking basics.
Your Time’s Value To Others
Other people value your time differently, they don’t wonder what your time is worth to you, they wonder what your time is worth to them. There are a lot of dynamics behind the scenes but the gist is this: You have time, time is valuable, and they want to use your time to better their situation. That’s it plain and simple, that is the whole idea behind employment.
The employer wants to hire you, generally, for as little as possible so they can take advantage of your time and skills. If they can buy your time and skills for a price that will allow them to profit off of you, then they will hire you, if not, then you don’t get the job. The math equation looks like this:
(Potential Increased Profit From Hiring You) – (Your Pay) = X
If X is greater than 0 then they might hire you, and the higher it is above X, the more likely you will get the job. There are many gray areas where some of these ideas may be bent or broken, but we are ignoring those for now.
Next time, we will discuss winning with time.
Sound-off: How do you value your time? Do you choose to use most of your time the way you want, or do you make sure that you are paid according to your valuations?
Image Credit: S. Sepp