This kind of mental framework is very key for analytic decision making. At a decision crossroads, having this sort of thought process has often helped me make the right choices. That being said, if I'm not careful, this kind of non-stop analysis of my productivity makes me pretty stressed out. Yes, I value my time a lot - but I've also had to learn to let go sometimes and let life happen. The more I continue to ruminate on thoughts like, "Am I creating $100 worth of value right now?", the more my ability to relax deteriorates. I don't want to be in constant productivity maximization mode.
The Value of Time
11–20 of 59 posts
Re: The Value of Time
#12This is an excellent thought process, and it's good to know about opportunity cost.
Once you do, internalize it, and pack it away so it can never see the light.
As soon as you start treating people as the equivalent of the monetary value of their time, you're lost. You've gone too far.
This way of thinking is powerful and dark. Please—use in moderation.
Re: The Value of Time
#13I find it frustrating that many tech people (sorry for being general, but I see it a lot on this site and other communities) have a general sense of disdain for MBA/BBA-educated individuals, and then write multi-paragraph blog posts about opportunity cost, which is a 101 concept in any economics or business curriculum.
I'm not trying to derisive of Jack -- it's a good post -- but this is not some grand insight. This is why educational and personal diversity is a good thing: reinventing the wheel doesn't just apply to code, it applies to business.
Re: The Value of Time
#14Now the fun part is that your time has different value to different people.
For instance for yourself, your time may be worth what you are being paid. Suppose that you get $120k/year. You work 8 hours per day, 5 days per week, 50 weeks per year, so you're being paid $60/hour. So if money for something comes out of you, $60/hour is a cap on what you're willing to pay - and actually it is less than that because you have little direct ability to change how much you're being paid.
Now let's look at that same employee from the point of view of the employer. If you've got an employee, after benefits, office space, training, etc, on average you're paying 2x salary for that person. (This figure varies by organization, but 2x is a typical figure.) That person works for you 50 weeks per year, 5 days/week, 6 hours per day. (Why 6 hours? Well they are present for 8, but take lunch, do personal emails, etc. So they only really work for perhaps 6 of those hours.) Do the math - that employee is costing $160/hour.
$60 vs $160 for the same person is pretty bad, but it does not end here. In order for it to make sense to hire an employee, you want that employee to be earning you more than they cost. So $160/hour is a floor for the value you hope they are providing - hopefully that figure is more like $200/hour or more.
The moral is that an employee's time is worth massively more for an employer than an employee. And therefore a wise employer should be willing to pay several times more than the employee to make improvements in how efficiently that time gets used.
(That said, there is a breed of employee who, faced with an employer who is willing to be generous, will try to figure out how much they can ask for. There is a balance to be found...)
Re: The Value of Time
#15This is an excellent thought process, and it's good to know about opportunity cost. Once you do, internalize it, and pack it away so it can never see the light. As soon as you start treating people as the equivalent of the monetary value of their time, you're lost. You've gone too far. This way of thinking is powerful and dark. Please—use in moderation.
Indeed. I know a company that made the mistake of putting an MBA type in charge of advertising, and therefore in charge of their affiliate program. She pushed always trying to figure out how much an affiliate was worth, before deciding if their stupid questions were worth the time that it took to answer them.
She made two fundamental mistakes. The first is that the time it takes to figure out up front whether someone is worth her time leads to a bad interaction surprisingly often (so even the "worthwhile" ones get a worse experience than otherwise). The second is that she valued an affiliate at the profit on the business they brought in minus the amount they got paid, completely missing the fact that having them out there linking to you improves SEO, which helps bring additional free traffic.
The result of her being penny-wise and pound-foolish, and that company's rapid growth trajectory turned flat and stagnated.
Re: The Value of Time
#16This reminds me of the movie In Time[1]. The movie itself isn't particularly amazing, but I definitely resonated with it's underlying themes around the value of both time and money, and how they are inextricably linked.
It's a hard idea to communicate across to your average layperson though, that their half hour of diligently shopping around for the best deal actually cost them more than they saved. It's all conjecture though until you're actually using your time to earn money, or you are being paid for your time. But even if you aren't directly making money from your time, you can argue that the time spent will still offset/reduce the amount of time you do earn money from.
There are definitely limits on this type of thinking, and how seriously you should take it.
Re: The Value of Time
#17I find it frustrating that many tech people (sorry for being general, but I see it a lot on this site and other communities) have a general sense of disdain for MBA/BBA-educated individuals, and then write multi-paragraph blog posts about opportunity cost, which is a 101 concept in any economics or business curriculum. I'm not trying to derisive of Jack -- it's a good post -- but this is not some grand insight. This…
I've never heard of people having disdain for the particular knowledge or economic "science" (to use that term loosely) of MBAs. The problem people have with such folk is the way it is applied (too often blindly).
Re: The Value of Time
#18[deleted]
Re: The Value of Time
#19[deleted]
Re: The Value of Time
#20"The trouble is you think you have time"
There is a garage in Chinatown in SF that has a phrase for every parking space. This one had the most impact on me - take a visit sometime and be inspired.