Why Paying for Things Is a Better Idea as You Get Better Off

Recently, I was forced to go to the post office in person to pick up a package. Reading that last sentence out loud is a bit of a tongue twister. Anyway, the lady in front of me in the line needed to send out a package but had forgotten to tape it, so the post office employee asked her if she would like to buy some tape for 3 dollars.

She did not like that idea at all. However, her response surprised me somehow. She thought that it was better to go back to her house (a 15 minute drive away), get some tape from her drawer, drive back, pay for parking, and then stand in line for half an hour, all to save 3 dollars.

I presume that if she has a job, it pays at least minimum wage ($11 in the city of Berkeley). Going back to her house would take at least an hour total. So she would spend $11 worth of time (at the bare minimum), all to “save” 3 dollars. That’s a bad idea.

Really, this shouldn’t surprise me. A lot of people never seem to grasp the basic idea that as you grow older and (hopefully) gain skills and experience, your time becomes more valuable, and therefore more expensive.

This is one reason people who have rather valuable time pay for their news, rather than just reading free articles all the time. If we assume that the news in the Wall Street Journal and the Economist is high-quality, then the time saved in not having to go look for news and not having to read ads makes it worth the cost.

Although money is an imperfect proxy for the value of time, it is a good heuristic for realizing whether doing something is worth it or not. For example, a 15 minute time waster that happens every day is a lot less tolerable when you realize that’s almost 1% of your time, and therefore your life. And for the people I know, that’s about $15 wasted, or almost $5,500 a year.

The take away from this is that it makes sense to trade money to save time if your time is relatively valuable. People whose time is less valuable, such as college students with few connections to wealthy people, are rational when they do things like drive two hours to meet their old boss. Until they gain the skills to make the time more valuable, it’s all they can do.

In either case, don’t waste time. Time is much more than money, because you can’t make more of it or get it back.

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