But use with caution, as I think the time/$ trade-off might imply you should maximise your working hours, which I think isn’t a good assumption. See point earlier about knowledge workers.
I definitely agree with “use with caution”. The value of my time question has been bothering me for years now, and I never really found a satisfying heuristic for it. There are just a lot of complications and there imho is no way this can reasonably be considered to be a constant value:
it depends not only on the amount of time you’re thinking about spending in a certain way (or gaining), but on the difference of value of the thing you’re considering you do as compared to the thing you would be doing otherwise
even if you manage to pin it down to some value in a situation, that’s only the marginal value of time given your circumstances, and it would differ if you had more/less time or money on your hands; thus, if you derive some great heuristic from that (e.g. “take a cab after parties”), depending on how much that impacts your behavior, this changes the value of your time, so the heuristic is sort of self-defeating to a degree
So I basically came up with a range of the value certain things I tend to do are worth per hour, and in that way have a way to compare things. It does feel like I’m overthinking and under-utilizing the principle though… one conclusion it led me to however was that I should work less, since my time was worth more to me than what I was paid per hour (after taxes). This is definitely a case where point 2 from above is highly relevant though. Reducing my time at the job rather drastically changes the value of my time, so I need to take that into account and try to find an equilibrium in working just as much (or little) such that the estimated value of my time (maybe averaged over my typical daily habits) reduces to roughly what I’m being paid to work. Which is tough!
But yeah, I’m getting a bit rambly. Just one more thing: Consumption smoothing is an interesting concept which I have to admit never occurred to me before. Thanks for the post! It also nudged me to once again look into investing which I’ve been procrastinating for years.
I definitely agree with “use with caution”. The value of my time question has been bothering me for years now, and I never really found a satisfying heuristic for it. There are just a lot of complications and there imho is no way this can reasonably be considered to be a constant value:
it depends not only on the amount of time you’re thinking about spending in a certain way (or gaining), but on the difference of value of the thing you’re considering you do as compared to the thing you would be doing otherwise
even if you manage to pin it down to some value in a situation, that’s only the marginal value of time given your circumstances, and it would differ if you had more/less time or money on your hands; thus, if you derive some great heuristic from that (e.g. “take a cab after parties”), depending on how much that impacts your behavior, this changes the value of your time, so the heuristic is sort of self-defeating to a degree
So I basically came up with a range of the value certain things I tend to do are worth per hour, and in that way have a way to compare things. It does feel like I’m overthinking and under-utilizing the principle though… one conclusion it led me to however was that I should work less, since my time was worth more to me than what I was paid per hour (after taxes). This is definitely a case where point 2 from above is highly relevant though. Reducing my time at the job rather drastically changes the value of my time, so I need to take that into account and try to find an equilibrium in working just as much (or little) such that the estimated value of my time (maybe averaged over my typical daily habits) reduces to roughly what I’m being paid to work. Which is tough!
But yeah, I’m getting a bit rambly. Just one more thing: Consumption smoothing is an interesting concept which I have to admit never occurred to me before. Thanks for the post! It also nudged me to once again look into investing which I’ve been procrastinating for years.