The other day I was walking to pick up some lunch instead of having it delivered. I also had the opportunity to freelance for $100/hr (not always available to me), but I still chose to walk and save myself the delivery fee.
I make similarly irrational decisions about money all the time. There are situations where I feel like other mundane tasks should be outsourced. Eg. I should trade my money for time, and then use that time to make even more money. But I can’t bring myself to do it.
Perhaps food is a good example. It often takes me 1-2 hours to “do” dinner. Suppose ordering something saves me $10 relative to what I’d otherwise spend at home. I think my time is worth more than $5-10/hr, and yet I don’t order food.
One possible explanation is that I rarely have the opportunity to make extra money with extra free time, eg. by freelancing. But I could work on startups in that free time. That doesn’t guarantee me more money, but in terms of expected value, I think it’s pretty high. Is there a reason why this type of thinking might be wrong? Variance? I could adjust the utilities based off of some temporal discounting and diminishing marginal utility or whatever, but even after that the EV seems wildly higher than the $5-10/hr I’m saving by cooking.
Here’s the other thing: I’m not alone. In fact, I observe that tons and tons of people are in a similar position as me, where they could be trading money for time very profitably but choose not to, especially here on LessWrong.
I wonder whether there is something I am missing. I wonder what is going on here.
I suspect there are multiple things going on. First and foremost, the vast majority of uses of time have non-monetary costs and benefits, in terms of enjoyment, human interaction, skill-building, and even less-legible things than those. After some amount of satisficing, money is no longer a good common measurement for non-comparable things you could do to earn or spend it.
Secondly, most of our habits on the topic are developed in a situation where hourly work is not infinitely available at attractive rates. The marginal hour of work, for most of us, most of the time, is not the same as our average hour of work. In the case where you have freelance work available that you could get $1.67/minute for any amount of time you choose, and you can do equally-good (or at least equally-valuable) work regardless of state of mind, your instincts are probably wrong—you should work rather than any non-personally-valuable chores that you can hire out for less than this.
One thing strikes me: you appear to be supposing that apart from how much money is involved, every possible activity per hour is equally valuable to you in itself. This is not required by rationality unless you have a utility function that depends only upon money and a productivity curve that is absolutely flat.
Maybe money isn’t everything to you? That’s rationally allowed. Maybe you actually needed a break from work to clear your head for the rest of the afternoon or whatever? That’s rationally allowed too. It’s even allowed for you to not want to do that freelancing job instead of going for a walk at that time, though in that case you might consider the future utility of the net $90 in getting other things that you might want.
Regarding food, do you dislike cooking for yourself more than doing more work for somebody else? Do you actually dislike cooking at all? Do you value deciding what goes into your body and how it is prepared? How much of your hourly “worth” is compensation for having to give up control of what you do during that time? How much is based on the mental or physical “effort” you need to put into it, which may be limited? How much is not wanting to sell your time much more cheaply than they’re willing to pay?
Rationality does not forbid that any of these should be factors in your decisions.
On the startup example, my experience and those of everyone else I’ve talked to who have done it successfully is that leading a startup is hell, even if it’s just a small scale local business. You can’t do it part time or even ordinary full time, or it will very likely fail and make you less than nothing. If you’re thinking “I could spend some of my extra hours per week on it”, stop thinking it because that way lies a complete waste of time and money.
One thing strikes me: you appear to be supposing that apart from how much money is involved, every possible activity per hour is equally valuable to you in itself.
No, I am not supposing that. Let me clarify. Consider the example of me walking to pick up food instead of ordering it. Suppose it takes a half hour and I could have spent that half hour making $50 instead. The way I phrased it:
Option #1: Spend $5 to save myself the walk and spend that time freelancing to earn $50, netting me $45.
Option #2: Walk to pick up the food, not spending or earning anything.
The problem with that phrasing is that dollars aren’t what matter, utility is, as you allude to. My point is that it still seems like people often make very bad decisions. In this example, the joy of walking versus freelancing + any productivity gains are not worth $45, I don’t think.
I do agree that this doesn’t last forever though. At some point you get so exhausted from working where the walk has big productivity benefits, the work would be very unpleasant, and the walk would be a very pleasant change of pace.
even if it’s just a small scale local business.
Tangential, but Paul Graham wouldn’t call that a startup.
You can’t do it part time or even ordinary full time, or it will very likely fail and make you less than nothing.
I disagree here. 1) I know of real life counterexamples. I’m thinking of people I met at an Indie Hackers meetup I used to organize. 2) It doesn’t match my model of how things work.
The original question is based on the observation that a lot of people, including me, including rationalists, do things like spending an hour of time to save $5-10 when their time is presumably worth a lot more than that, and in contexts where burnout or dips in productivity wouldn’t explain it. So my question is whether or not this is something that makes sense.
I feel moderately strongly that it doesn’t actually make sense, and that what Eliezer eludes to in Money: The Unit of Caring is what explains the phenomena.
Many people, when they see something that they think is worth doing, would like to volunteer a few hours of spare time, or maybe mail in a five-year-old laptop and some canned goods, or walk in a march somewhere, but at any rate, not spend money.
Believe me, I understand the feeling. Every time I spend money I feel like I’m losing hit points. That’s the problem with having a unified quantity describing your net worth: Seeing that number go down is not a pleasant feeling, even though it has to fluctuate in the ordinary course of your existence. There ought to be a fun-theoretic principle against it.
The other day I was walking to pick up some lunch instead of having it delivered. I also had the opportunity to freelance for $100/hr (not always available to me), but I still chose to walk and save myself the delivery fee.
I make similarly irrational decisions about money all the time. There are situations where I feel like other mundane tasks should be outsourced. Eg. I should trade my money for time, and then use that time to make even more money. But I can’t bring myself to do it.
Perhaps food is a good example. It often takes me 1-2 hours to “do” dinner. Suppose ordering something saves me $10 relative to what I’d otherwise spend at home. I think my time is worth more than $5-10/hr, and yet I don’t order food.
One possible explanation is that I rarely have the opportunity to make extra money with extra free time, eg. by freelancing. But I could work on startups in that free time. That doesn’t guarantee me more money, but in terms of expected value, I think it’s pretty high. Is there a reason why this type of thinking might be wrong? Variance? I could adjust the utilities based off of some temporal discounting and diminishing marginal utility or whatever, but even after that the EV seems wildly higher than the $5-10/hr I’m saving by cooking.
Here’s the other thing: I’m not alone. In fact, I observe that tons and tons of people are in a similar position as me, where they could be trading money for time very profitably but choose not to, especially here on LessWrong.
I wonder whether there is something I am missing. I wonder what is going on here.
I suspect there are multiple things going on. First and foremost, the vast majority of uses of time have non-monetary costs and benefits, in terms of enjoyment, human interaction, skill-building, and even less-legible things than those. After some amount of satisficing, money is no longer a good common measurement for non-comparable things you could do to earn or spend it.
Secondly, most of our habits on the topic are developed in a situation where hourly work is not infinitely available at attractive rates. The marginal hour of work, for most of us, most of the time, is not the same as our average hour of work. In the case where you have freelance work available that you could get $1.67/minute for any amount of time you choose, and you can do equally-good (or at least equally-valuable) work regardless of state of mind, your instincts are probably wrong—you should work rather than any non-personally-valuable chores that you can hire out for less than this.
One thing strikes me: you appear to be supposing that apart from how much money is involved, every possible activity per hour is equally valuable to you in itself. This is not required by rationality unless you have a utility function that depends only upon money and a productivity curve that is absolutely flat.
Maybe money isn’t everything to you? That’s rationally allowed. Maybe you actually needed a break from work to clear your head for the rest of the afternoon or whatever? That’s rationally allowed too. It’s even allowed for you to not want to do that freelancing job instead of going for a walk at that time, though in that case you might consider the future utility of the net $90 in getting other things that you might want.
Regarding food, do you dislike cooking for yourself more than doing more work for somebody else? Do you actually dislike cooking at all? Do you value deciding what goes into your body and how it is prepared? How much of your hourly “worth” is compensation for having to give up control of what you do during that time? How much is based on the mental or physical “effort” you need to put into it, which may be limited? How much is not wanting to sell your time much more cheaply than they’re willing to pay?
Rationality does not forbid that any of these should be factors in your decisions.
On the startup example, my experience and those of everyone else I’ve talked to who have done it successfully is that leading a startup is hell, even if it’s just a small scale local business. You can’t do it part time or even ordinary full time, or it will very likely fail and make you less than nothing. If you’re thinking “I could spend some of my extra hours per week on it”, stop thinking it because that way lies a complete waste of time and money.
No, I am not supposing that. Let me clarify. Consider the example of me walking to pick up food instead of ordering it. Suppose it takes a half hour and I could have spent that half hour making $50 instead. The way I phrased it:
Option #1: Spend $5 to save myself the walk and spend that time freelancing to earn $50, netting me $45.
Option #2: Walk to pick up the food, not spending or earning anything.
The problem with that phrasing is that dollars aren’t what matter, utility is, as you allude to. My point is that it still seems like people often make very bad decisions. In this example, the joy of walking versus freelancing + any productivity gains are not worth $45, I don’t think.
I do agree that this doesn’t last forever though. At some point you get so exhausted from working where the walk has big productivity benefits, the work would be very unpleasant, and the walk would be a very pleasant change of pace.
Tangential, but Paul Graham wouldn’t call that a startup.
I disagree here. 1) I know of real life counterexamples. I’m thinking of people I met at an Indie Hackers meetup I used to organize. 2) It doesn’t match my model of how things work.
Agreed if we assume this premise is true, but I don’t think it is often true.
The original question is based on the observation that a lot of people, including me, including rationalists, do things like spending an hour of time to save $5-10 when their time is presumably worth a lot more than that, and in contexts where burnout or dips in productivity wouldn’t explain it. So my question is whether or not this is something that makes sense.
I feel moderately strongly that it doesn’t actually make sense, and that what Eliezer eludes to in Money: The Unit of Caring is what explains the phenomena.