The Opportunity Cost of How we Spend Time

Salvador Dali's "La persistencia de la memoria".

Surfing the internet for some information, I came across an article that explains why I am a dummy. It says:

Getting a job and trading your time for money may seem like a good idea. There’s only one problem with it. It’s stupid! It’s the stupidest way you can possibly generate income! This is truly income for dummies.

Why is getting a job so dumb? Because you only get paid when you’re working. Don’t you see a problem with that, or have you been so thoroughly brainwashed into thinking it’s reasonable and intelligent to only earn income when you’re working? Have you never considered that it might be better to be paid even when you’re not working? Who taught you that you could only earn income while working? Some other brainwashed employee perhaps?

While the writer indeed sprouts sound advice, the fact that he is himself self-employed quite remove the ring of objectivity in his articles.

But the man knows his Economics concepts. In his rantings against lifelong wage slaves, he is in fact expounding upon the concept of opportunity cost. Opportunity is the next best alternative forgone. Time is a scarce resource. Wit any given activity that we spend our time doing, we are potentially giving up doing something else. Time is valuable, and we are giving up more than we know if we spend time working, he says.

So what is the value of time? British economics professor Ian Walker, of the University of Warwick, along with the folks at Barclaycard, came up with an equation to help figure it out: the so-called real hourly wage. It adjusts a person's nominal salary for taxes and cost of living.

Once you know your real hourly wage (or you can estimate one), you can figure out what's a good use of your time and what's not. You can use the calculator found here.

Yet, the writer put forward one caveat. How we measure utility from any given activity is always an individual choice.

While we can put a price on your time, you might decide that spending the day staring out at the ocean is priceless.