The Value of Time • Hacker News Board

Re: The Value of Time

#41

Post by jonbeerhalter » Wed, Jul 18, 2012, 1:08 PM UTC

btilly wrote: post #15

calinet6 wrote: post #12

This 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…

FYI,if you're being penny wise and pound foolish then you're not doing a very good job of calculating opportunity cost.

And it also sounds like the "MBA type" wasn't doing a very good job of calculating value added, which is a separate problem from opportunity cost.

Re: The Value of Time

#42

Post by icebraining » Wed, Jul 18, 2012, 1:19 PM UTC

acro wrote: post #30

There is more to life than optimizing everything based on cost. That walk from the more distant hotel is healthy for you, and you get to enjoy the scenery. Sometimes it's good to think of time as having monetary value because it gives you perspective, but also sometimes it's good to forget it and actually enjoy life.

Or one could say instead that there are other costs besides monetary ones. Being less healthy and/or happy is a cost too.

Re: The Value of Time

#43

Post by sageikosa » Wed, Jul 18, 2012, 1:19 PM UTC

Radim wrote: post #28

gfodor wrote: post #25

While most of the comments here are talking about the fact that this is the posters "discovery" of opportunity cost, there's another point to be made here. There are several reasons why, as a startup founder, getting that $660 laptop instead of the $700 one benefits your company other than the $40 that stays in your bank account. Frugality breeds more frugality: if you set an example, others will follow and compound…

Slightly off-topic: I had ramen a few times in Japan, and while truly delicious, it's massively expensive and rather exotic. Why is ramen a synonym for "cheap" in the US (apparently)? Or does it mean just "instant noodles" over there?

The US of A has a greater capacity to produce grains needed to produce the noodles, and can deliver them to market without having to put them on a boat. Japan has less arable land, so less grain producing land, and (probably) has to import more (which requires boats).

Re: The Value of Time

#44

Post by gwern » Wed, Jul 18, 2012, 2:32 PM UTC

coryl wrote: post #9

You probably shouldn't spend your day calculating trade-offs for every purchase you make. Theoretical value added is still just theoretical value, but cash outflows come from finite cash. The best values and leverage are found high repetition or high scale activities. For example, everyone has to commute to work every day. Considering moving the office closer to a train station/highway/bus terminal so that each of yo…

No, you shouldn't, but you can still calculate more. For example, do one calculation up front about 'should I in general take the subway or a taxi?' and then follow your answer for the next couple years; for maybe a few minutes of work, you save money-time for perhaps thousands of days to come.

In general, the best space-time tradeoff will never be 'all time' or 'all space'.

Re: The Value of Time

#45

Post by btilly » Wed, Jul 18, 2012, 2:34 PM UTC

jonbeerhalter wrote: post #41

btilly wrote: post #15

Earlier quoted context omitted.

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…

FYI,if you're being penny wise and pound foolish then you're not doing a very good job of calculating opportunity cost. And it also sounds like the "MBA type" wasn't doing a very good job of calculating value added, which is a separate problem from opportunity cost.

That would be my main point.

There are a lot of hidden sources of value which are hard to quantify when it comes to anything like customer service. Therefore the errors that she was making are likely to be systemic in anyone who is trying to be economically efficient.

Re: The Value of Time

#46

Post by isleyaardvark » Wed, Jul 18, 2012, 3:04 PM UTC

gfodor wrote: post #25

While most of the comments here are talking about the fact that this is the posters "discovery" of opportunity cost, there's another point to be made here. There are several reasons why, as a startup founder, getting that $660 laptop instead of the $700 one benefits your company other than the $40 that stays in your bank account. Frugality breeds more frugality: if you set an example, others will follow and compound…

That could hurt your company if they follow your example and don't make that value calculation, and chase $40 savings instead of spending their time more wisely.

(I also was under the impression that there wasn't any difference in the quality of the hypothetical $700/$660 laptops, that the difference in price merely comes from trying to exploit inefficiencies in the market.)

Re: The Value of Time

#47

Post by stonemetal » Wed, Jul 18, 2012, 3:18 PM UTC

Radim wrote: post #28

gfodor wrote: post #25

While most of the comments here are talking about the fact that this is the posters "discovery" of opportunity cost, there's another point to be made here. There are several reasons why, as a startup founder, getting that $660 laptop instead of the $700 one benefits your company other than the $40 that stays in your bank account. Frugality breeds more frugality: if you set an example, others will follow and compound…

Slightly off-topic: I had ramen a few times in Japan, and while truly delicious, it's massively expensive and rather exotic. Why is ramen a synonym for "cheap" in the US (apparently)? Or does it mean just "instant noodles" over there?

American Ramen 22 cents a meal: http://www.amazon.com/Maruchan-Ramen-Chili-3-Ounce-Packages/...

Re: The Value of Time

#48

Post by msellout » Wed, Jul 18, 2012, 3:37 PM UTC

btilly wrote: post #45

jonbeerhalter wrote: post #41

Earlier quoted context omitted.

FYI,if you're being penny wise and pound foolish then you're not doing a very good job of calculating opportunity cost. And it also sounds like the "MBA type" wasn't doing a very good job of calculating value added, which is a separate problem from opportunity cost.

That would be my main point. There are a lot of hidden sources of value which are hard to quantify when it comes to anything like customer service. Therefore the errors that she was making are likely to be systemic in anyone who is trying to be economically efficient.

And even more likely to be systemic in anyone who is not trying to measure the world. Science works.

Re: The Value of Time

#49

Post by klochner » Wed, Jul 18, 2012, 3:37 PM UTC

DanielRibeiro wrote: post #7

Jason Cohen, founder of WP Engine, talked a bit about this when he interviewed[1] for Mixergy: Yeah. I’m a big fan of, I think Don Mershaw[SP] was the first person that told me this, but he said a founder needs to value his time at $1000/hour ... Which he justifies: So, what if you had a consulting customer that said, “I’ll pay you $200/hour but there’s only a one fifths chance that I’ll actually pay you.” Now, what…

But that doesn't make sense - in the consulting example you would still value your time at $200/hour, you'd just be at a $1000/hour wage.

That fits with startups, where you value your time at x, and are looking for at 5x exit when then thing sells. You're still valuing your time at x.

Re: The Value of Time

#50

Post by msellout » Wed, Jul 18, 2012, 3:45 PM UTC

genbattle wrote: post #16

This 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 conjectu…

I also appreciated the concept of _In Time_, even though the plot was awful. I wouldn't hedge by saying there are limits to this type of thinking. Everyone should take it very seriously. Time is money in a very real sense.

Speaking of which, I should get back to work.