Thursday, August 6, 2009

What's your time worth?

One of the hardest questions I often find myself needing to answer is what my time is worth. Simple everyday decisions are influenced by what the answer to this question is - Should I get groceries from the store myself, or order online? Should I clean my own apartment or hire a professional? Should I contest the parking ticket by mail, in person or simply pay it? Should I go out an enjoy the weather instead of working overtime?

Of course, the right answer in most cases depends on more than just how you value your time. Tangible (I might pick better produce in person than online, or a professional could do a better job cleaning my apartment than I can) and non-tangible (I get to experience the judicial process at the municipal court myself if I contest a ticket in person) factors can sometimes influence these decision more than the absolute value of your time, and generally it's a combination of these factors + the value of your time which leads to the right answer.

What factors influence how you derive the value of your time? Here's a quick list of things I could think of:
  • Your age relative to life expectancy. Generally, the older you get the more valuable your time is. Time does run out eventually, afterall.
  • Real dollar value of gains from alternate activities you could be engaged in versus the intended activity. If you're paid by the minute on your job, the dollar value of every minute your spend in the break room outside of the allowed times better be worth more than your per-minute salary.
  • The intangible value of alternate activities you could be engaged in versus the intended activity. Heh - good luck figuring this out!
  • The tangible and intangible deferred value/costs of making a decision. Not feeding the parking meter in favor of enjoying your cup of coffee by the lake will cost you $25 next week.
  • Risk associated with the decision you make. You're quite likely to hurt yourself sawing wood, and depending on how badly you're injured you could easily outspend in medical bills what you would have paid a professional instead. Again, look luck quantifying risk.
What else do you consider when deciding one way or another?

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