I find all these sorts of analyses deeply frustrating because they seem to take place in spherical-cow world and never to take account of the actual experience of virtually everyone who participates in the labor market—you can’t just choose how many of your hours you convert into dollars at an arbitrary level!
For hourly employees, one’s employer usually determines the schedule with limited input from workers.
For salaried employees, the marginal hour worked results in essentially zero wage gain. It may result in being marginally more likely to receive a bonus or promotion down the line but these effects are highly uncertain and may have all sorts of slopes and plateaus in the hours/$$ curve.
For self-employed, if you do anything other than daytrade, then you likely have to interact with suppliers, customers, etc, and there’s often pretty legit exogenous limits on your ability to translate hours in to $$.
Additionally, the experience benefits seem dubious to me for a similar reason, which is that to the extent you are selling your labor in any capacity (vast majority of workers), the potential buyers of your labor often have limited view into your experience or productivity, and to the extent they estimate these based on your experience, it’s usually going to be measured in years not in hours.
So its very unclear to me the mechanism by which most people could decide to turn their time into money at anything approaching something that looks like a marginal wage, and additionally unclear to me how, even if so, working harder now will actually increase the returns 20 years from now in the way this post proposes.
Yes, there are whole constellations of frictionless, spherical cows in here.
I think at best you could say that accepting an offer of employment for $X/hr implies that you value your time less than $X/hr, but even this best-case interpretation is only true for the first few hours per week or whatever. Having enough income to avoid being homeless and worried about food is likely very much more valuable than whatever income comes in on top of that. What’s more, employment turns non-employment time into a scarcer resource.
Someone could work for $15/hr, but quite consistently value their remaining time at $100/hr due to a combination of decreasing utility of money and value of an increasingly scarce resource.
Likewise someone could work for $100/hr and it could still be consistent for them to value an hour of their time at $15/hr.
I find all these sorts of analyses deeply frustrating because they seem to take place in spherical-cow world and never to take account of the actual experience of virtually everyone who participates in the labor market—you can’t just choose how many of your hours you convert into dollars at an arbitrary level!
For hourly employees, one’s employer usually determines the schedule with limited input from workers.
For salaried employees, the marginal hour worked results in essentially zero wage gain. It may result in being marginally more likely to receive a bonus or promotion down the line but these effects are highly uncertain and may have all sorts of slopes and plateaus in the hours/$$ curve.
For self-employed, if you do anything other than daytrade, then you likely have to interact with suppliers, customers, etc, and there’s often pretty legit exogenous limits on your ability to translate hours in to $$.
Additionally, the experience benefits seem dubious to me for a similar reason, which is that to the extent you are selling your labor in any capacity (vast majority of workers), the potential buyers of your labor often have limited view into your experience or productivity, and to the extent they estimate these based on your experience, it’s usually going to be measured in years not in hours.
So its very unclear to me the mechanism by which most people could decide to turn their time into money at anything approaching something that looks like a marginal wage, and additionally unclear to me how, even if so, working harder now will actually increase the returns 20 years from now in the way this post proposes.
Yes, there are whole constellations of frictionless, spherical cows in here.
I think at best you could say that accepting an offer of employment for $X/hr implies that you value your time less than $X/hr, but even this best-case interpretation is only true for the first few hours per week or whatever. Having enough income to avoid being homeless and worried about food is likely very much more valuable than whatever income comes in on top of that. What’s more, employment turns non-employment time into a scarcer resource.
Someone could work for $15/hr, but quite consistently value their remaining time at $100/hr due to a combination of decreasing utility of money and value of an increasingly scarce resource.
Likewise someone could work for $100/hr and it could still be consistent for them to value an hour of their time at $15/hr.
Real life is messy.