

The Money/Time fallacy - maayank
http://thoughts.maayank.com/2012/08/the-moneytime-fallacy-or-guide-to-very.html

======
stephengillie
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.

\---

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.

~~~
dfxm12
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.

~~~
maayank
_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.

~~~
tvjunky
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.

~~~
maayank
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.

~~~
tvjunky
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.

~~~
Variance
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.

~~~
maayank
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.

~~~
Variance
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.

------
grecy
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.

~~~
stephengillie
_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.

~~~
grecy
Agree. My point is that all those costs are much higher when you go to work.

------
frankus
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).

~~~
maayank
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.

------
drharris
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.

------
dedward
Have to agree...

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.

~~~
maayank
Agreeing with what you said as well.

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.

------
tvjunky
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.

------
paulsutter
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.

------
lpolovets
There's a nice Quora thread that's related to this post:
[http://www.quora.com/Personal-Finance/If-I-make-30-per-
hour-...](http://www.quora.com/Personal-Finance/If-I-make-30-per-hour-
working-a-40-hour-week-job-how-much-should-I-consider-my-time-worth-in-terms-
of-deciding-whether-or-not-a-task-is-worthwhile)

------
coffeegeek
You can lose money and make it back, but you cannot lose time and make it
back. That's the real fallacy when comparing money and time.

------
eevilspock
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.

Sigh.

~~~
maayank
_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.

~~~
eevilspock
[Are you pretending that you are not the author?]

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.

~~~
maayank
_But that's not what your article was about!_

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.

------
conductr
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.

~~~
sukuriant
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.

