The Opportunity Costs of Time refers to a concept in economics that values the costs of anything by the other possibilities that are foregone by your present choice of spending time. For instance, if I spend time today washing my car, I could have been working, going to school, making love or doing any number of alternative endeavors. Each of these other choices entails a “cost” in terms of both money and my perception of the value of the time spent. Some things I can do will provide me more money either now or in the future and some things will provide me more pleasure. Some things will probably do neither (taking out the garbage) but they are necessary to prevent possible future unpleasantness or costs.
Here is an example from my life. When I decided to go to school to get my Ph.D. degree, a number of years ago, I gave up a decent paying job. My “opportunity costs” of going to school would include the following:
1. Salary for 4 years
2. Possible raises and promotions
3. Cost of tuition and books
4. Cost of loans
5. Interest on loans
6. Time to spend on more pleasant activities
7. Study time
8. Class time spent in some boring classes
If I were thinking rationally before I started my school program, I would have considered all of these costs and measured them against the expected benefits of getting my degree. As it turned out, I do believe that I came out ahead. The one factor that cannot be calculated in this mental effort is the “risk” factor for time spent. For instance, I wonder each time I go out and run a rugged trail if I will break my leg. In over 5000 runs, I have not broken my leg yet, but as they say “there is always a first time.” I try to compensate for this possibility by taking my cell phone with me when I go trail running. Two small problems I often encounter are, first, that I cannot get T-Mobile reception anyplace on my Ice Age Trails in Wisconsin and second, that I often forget to take my cell-phone holder. Thus, my risk factor escalates some.
It is interesting to think of Time as Risk. We often talk about time as money but the opportunity costs of time also imply a risk. For instance, I might not have been able to get a good job when I left grad school or I might not have found that my Ph.D. degree opened any more doors than before I obtained it. If we think about the idea of Opportunity Time rather than Opportunity Costs, it may provide a different set of insights into the activities we pursue. Another striking example of this concerns the oft given wisdom that the value of obtaining a college degree is worth the time spent beyond merely going to high school. However consider the following facts:
•Average net worth of a Forbes 400 member without college degree: $2.27 billion
•Average net worth of a Forbes 400 member with a college degree: $2.13 billion
•Percentage of Forbes 400 members with college degrees: 66%, without 33%.
•Richest self-made Americans without a college degree:
William H. Gates III
Harvard University, dropout
Net worth: $43 billion
Source: Microsoft (nasdaq: MSFT – news – people )
Paul Allen
Washington State University, dropout
Net worth: $21 billion
Source: Microsoft; Charter Communications (nasdaq: CHTR – news – people )
Larry Ellison
University of Illinois, dropout
Net worth: $15.2 billion
Oracle (nasdaq: ORCL – news – people )
Michael Dell
University of Texas Austin, dropout
Net worth: $11.2 billion
Dell (nasdaq: DELL – news – people )
The above facts can be found at http://www.forbes.com/2003/07/28/cx_dd_0728mondaymatch.html
When I look at the facts above, it makes me wonder what the real value of a degree is. It does not appear that it can simply be measured by monetary returns for the billionaires without a degree are richer than the billionaires with a degree. Perhaps, the real value lies in how confident it makes us feel or how much more literate and wise we are? If so, I have yet to see any evidence that going to college makes one either more confident or wiser. So we return to the Opportunity Risks of spending time. Here are some quotes that I like that reflect on this issue:
“Don’t be fooled by the calendar. There are only as many days in the year as you make use of. One man gets only a week’s value out of a year while another man gets a full year’s value out of a week.” – Charles Richards
“A man who dares to waste one hour of life has not discovered the value of life.” – Charles Darwin
Thus, I do not think that time can be measured as simply money or simply opportunity costs. I think we need to measure time as a risk and time as rewards and costs that go beyond monetary considerations. I am not making any money writing this blog today. I have been writing it for over two years now and have not made one dime yet on it. No one has picked me for a “reality” show and no one has called me up to be on the Oprah show. Nevertheless, I write these blogs and am sustained by the faith and hope that somehow each day or perhaps only once a month, I might make a positive difference in someone’s life. There is a great risk in my spending this time with this hope, but without hope and risk what would our lives be. If we can go through live and do no harm or do more good than we do harm, then we may have done all that is possible as a human being. The simple calculus of time as money or time spent on activities that pay a dividend reduces life to a pure equation with no emotion or no feeling. We are not automatons to be driven by calculators that measure the dollar value of every minute spent. I think we need more choices and a wider set of criteria in which to measure the value of the time we spend.
Do you spend your time well? Are you satisfied with the efforts and goals you have set for your life? Are you doing what you want to with your life and time? If not, why? When will you start making the choices that bring you joy and satisfaction?