What’s the Value of Your Life Really Worth?
As the economy changes how we evaluate our participation in it needs to change too.
What is economics exactly?
According to Merriam-Webster, economics is:
a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services.
But when you look to academia to get an understanding of what economics is really all about, economists can’t seem to agree.
The University of Buffalo provides the best example that ranks the highest in a Google search. They state:
Economics is the study of scarcity and its implications for the use of resources, production of goods and services, growth of production and welfare over time, and a great variety of other complex issues of vital concern to society.
Meanwhile, the economics department at Harvard argues that economics is an oracle that can provide solutions to myriad problems in the world:
Economics helps provide answers for some of the world’s most pressing questions, from the future of work to ending global poverty to improving the environment.
And if you’re looking for the University of Chicago to help you understand what economics is, you’ll be hard-pressed to find a working definition on their website. To do so, you’ll have to sift through copious amounts of ideological, political, and methodological jargon first.
Modern-day economics is practiced as a series of policy decisions on how to manage the supply of financial resources. This is done at the federal level with regard to inflation, but it’s also done within companies to forecast consumer sentiment and manage expectations in the quarters ahead.
Depending on who you ask, economics is about resource allocation, solving social problems, and public policy. This is what economics might have become and how we interpret it today, but it isn’t what economics fundamentally is.
Economics is a series of immutable laws that govern the world. Just like physics.
It’s about the competition for resources because resources are scarce. It’s recognizing that there are finite limits to growth and consumption.
What many modern-day economists fail to do is define how competition arises and how systems are created to make resource allocation possible in the first place. They substitute human behavior for mathematical equations and implement policies to foster an environment most conducive to the businesses — rather than the consumers — operating in it.
This essay is going to look at economics through the lens of competition over resources, specifically time. This is the most valuable resource on the planet because it is both finite and scarce. Yet, it is rarely brought up in discussions of economics. It will argue that money is a measure of time and that time is the actual resource that is being allocated to provide goods and services.
The game of economics isn’t just a way to develop processes for production, resource allocation, and consumption — it’s about the constant exchange of time.
Economics studies resource scarcity. The most valuable resource on the planet is time — not money. Economics is really the study of time utilization.
When you think of economics, you probably think of capitalism. You think of production and profitability. These ideas come from economic thought leaders like Adam Smith and John Maynard Keynes.
Their theories tell us that a free market should decide how resources are distributed and that competition over the means of production should be done by free enterprises rather than the state.
While most people would concur that the laws of supply and demand should freely run their course, capitalism neglects to acknowledge the actual trade-off required to manufacture goods or provide services. For any economic system to work, time must be the primary commodity being exchanged.
That’s because the currency of an economic system — money — is really a measure of time. To manufacture a widget, one must first exchange their labor to produce it. And to be able to purchase that widget, one must exchange their time in gainful employment to earn money to pay for it. The value of money used to measure growth in an economy is really a function of time.
That has serious implications when it comes to the ownership of the means of production. Whoever owns the productive capabilities of an economy owns the time of its participants. In a socialist system, that would be the state. But in a capitalist system, it’s the free market — or so we would like to think.
The free market isn’t actually free. It’s governed by those who own the productive capabilities in an economy. And who might that be? The wealthy.
Those who already have wealth are the ones who benefit the most from the capitalist system as it is because they have the capital to continue investing in it. The peasantry, especially those consumed by debt liabilities, have no skin in the game. They must simply work to subsist as peasants have always done.
The process of toiling for a paycheck in order to cover the cost of living is the process of wealth creation for those who own the means of production. Every time you swipe a card to buy groceries or whatever you seem to think you need to buy at Target, you’re engaging in a financial transaction. That transaction takes money out of your bank account and moves it to Target’s.
If money is really a measure of time when you engage in financial transactions you’re actually paying for goods and services with your time. If it’s a debit transaction, you’re paying for it with past time — the time you’ve already worked to generate the money you currently have to cover the expense. But if you use a credit card that you won’t be able to immediately pay off, you’re mortgaging your future time, plus interest.
The distribution and acquisition of wealth, then, is about time, not money. To understand this in literal terms, look to the 2011 film In Time. In the movie, society is transacted just like this, in time rather than dollars.
Physical barriers segregate the rich from the poor, representing the barriers that exist between those who have built businesses to extract and accumulate time — capital — from those who have to work to keep themselves alive. Through tight border controls — passage of which is tolled in time — the rich control the distribution of resources to the poor. And thus they control the prices of those resources or how much time is extracted from the people receiving them. Prices fluctuate daily. Workers earn less for their time, making it increasingly difficult to keep pace with the rising cost of living.
Eventually, time runs out. Literally. It comes without a shock that life in poor communities is rife with crime as people do whatever they can to survive.
What I just described is the plot of a dystopian thriller that came from the imagination of a Hollywood screenwriter, but it aptly reflects the capitalist world we live in today. Workers like you show up to jobs to earn a paycheck. Over time, the value of that paycheck declines. The money earned from an hour of labor today purchases less than it did yesterday. You continue working hard, playing a game that was designed to extract your time from you without even realizing it.
For the system to work, time has to be moved from one person to another, measured by money. That’s the game we’re really playing. The average person isn’t going to work to earn a living to provide for their family through financial resources alone. What they’re really trading is time.
A free market can’t allocate time, but central planning can. That results in an accumulation of extracted time by a minority of capitalist elites.
The ability to effectively distribute resources isn’t about a free market. That’s because a free market is a poor arbiter of time allocation. To be true everyone would be able to freely allocate their time — including the peasants selling it in the labor market.
The economy is really dependent on central planning. Not Soviet-style government-controlled central planning. But a capitalist system of central planning where those who own the means of production and distribution of resources are the ones who are able to extract your time to accumulate it. This is represented by profit and is deemed the benchmark of success in today’s society.
Those in power know this. That is why they are in competition with one another to develop the best top-down system to take your time — not your money. Money is merely the byproduct of the amount of time you spend earning it.
After World War II, the American Dream was the system of resource distribution that governed society. Americans dutifully went to jobs during the week and went shopping on the weekends. They believed if they just worked hard enough, they could have a house with a white picket fence where they could happily raise their 2.4 children. Slaving away at a job was a means to that end.
At some point in the 1980s or 1990s, the system changed. Instead of working to live the dream, Americans began to finance it. Uncoincidentally, this happened shortly after the American Dollar was removed from the gold standard and currency debasement began to skyrocket. An hour of labor was no longer worth what it used to be and, thus, could no longer be a means to achieving the dream.
Over the course of the next two decades, Americans became increasingly dependent on debt. They charged things to credit cards, bought houses that were too big, and mortgaged their future on a college education that has proven to be worthless. Debt ballooned and the ability to regulate gratification waned. Millions of American workers today are the legacy of conspicuous consumer values. They work not to live a dream but to chase it.
This debt-based system of resource distribution was introduced by design. Compounding interest is a clever way to continue extracting time from workers while further debasing the currency they’re transacting in. It’s meant to perpetually exist without ever being fully repaid as those who own financial capital — lenders — become extraordinarily wealthy.
Now the system is changing once more. Your time is literally maxed out in the physical world. There’s no future left to mortgage, which means there’s nothing left for traditional capitalists to take. Instead of extracting time through labor, they are now extracting time through attention. Your mind is a fertile frontier that is ripe for conquering.
That’s what’s happening when you mindlessly scroll on social media or binge-watch the newest series being hyped on Netflix. The bulk of your waking hours are now employed in front of a digital screen. What little time you have left is being siphoned away, degrading your ability to interact with other humans and your body’s ability to naturally regulate its own nervous system.
Time is the scarcest asset on the planet which is why economics is really the study of time rather than money. It’s not a theory or a principle that can be invoked to inform a policy, nor is it a particular political persuasion. It’s a fixed law that governs each of us. There are 24 hours in a day, 168 hours in a week, and 8,760 hours in a year. Every minute that passes is a minute you will never be able to reclaim.
The game of economics is about controlling your time, not your money. Only when you learn to play the game for what it is — a game about time — can you begin to create wealth from it.
The government is supposed to arbitrate the distribution of resources, but it wasn’t designed with the allocation of time in mind.
Aside from scarcity, economics is also about the allocation and distribution of resources. The ability to distribute resources is defined by political ideology because the government is the only institution that exists above socioeconomic divisions. It’s supposed to be an arbiter that prevents capital from being accumulated in the hands of a few at the expense of the many.
Whether the government actually works as it’s supposed to is neither here nor there. What’s more important is understanding how economic theories inform the core function of government. Free market capitalism and minimal government oversight advocate for the wealthy, while socialism and direct government intervention benefit the majority of people who don’t have capital and likely won’t be able to acquire it from the system as it currently exists.
At the end of the day, these theories are just that — theories. Adam Smith and Karl Marx both look at economics from the political lens that was most salient during their respective lifetimes. But they both, more or less, say the same thing: finding a way to empower the Have Nots to compete with the Haves. Capitalism tried to do this with private ownership, socialism with redistribution. Both are merely two different ways to solve for the distribution of resources and, thus, capital allocation in an effort to make the system more equitable.
Adam Smith wrote the Wealth of Nations following centuries of transition out of feudalism. Capitalism wasn’t necessarily the best solution for allocating resources but it was a novel solution that enabled the peasantry to own assets for the first time in human history.
Karl Marx’s theories on socialism were the byproduct of the same thing. Russia emerged from feudalism far later than the rest of Europe. While the nascent American experiment was fighting for the future of slavery, Russia was abolishing serfdom. Das Kapital was published a few years later.
What Marx had that Smith didn’t was the benefit of hindsight. Marx could study the emergence of colonial mercantilism and conspicuous consumption that followed to deduce that capitalism — as it was being practiced — would cannibalize itself. And that has proven to be true. Linear growth can only last so long on a planet of finite resources.
The problem with these theories isn’t too much or too little government control over resources or the means of production. What they fail to acknowledge is that time is a critical component of economics. Allocation of time is fundamental to governing economic activity, but an institution like the government cannot adequately regulate the allocation of a resource it knows nothing about. Wages and incomes are merely a proxy for the measure of time. It’s the only way the system of modern economics can even come close to allocating it.
This creates a paradox. Without a sufficient way to measure the value of time that is independent of money, you can’t make decisions on how to best allocate it. Human capital has thus been reduced to wage slavery under the false belief that financial inputs are the primary inputs required to keep the capitalist engine running. Likewise, it assumes that financial outputs are the only way to measure success.
There is no qualitative measure for the value of time and there is no way to capture the cumulative value of time within a society across a long time horizon.
That’s why the ability to control and allocate time is the single most important thing individuals can do to reclaim power within the economy as it currently exists. When you learn to play the game as it is — rather than how you want it to be — you can make choices on the best way to allocate time to design a system that leads to living the life you want to live.
It’s up to individuals to reclaim their time. No one else is going to do it for you. To start, you first have to know what your life is worth in economic terms.
The system that’s in place isn’t designed to work for your benefit, no matter how clever you think you are. Nor is it meant to be easy to change. It’s designed to obfuscate the value of time, rendering you unable to decide how to allocate it for yourself.
The power doesn’t just lie in the elite’s ability to take time from you. It also lies in your own ignorance. If you don’t know what an hour of your time is worth, you have no way of knowing whether or not you’re spending it fruitfully.
Instead, you focus on evaluating your life by the totality of your salary or the sum of your physical possessions. You work more to earn more, believing it is a measure of success, all the while you’re blissfully unaware that this is by design.
You substitute your salary as a metric to define your worth without knowing what each individual hour renders you. By working more, you dilute the value of your life, making it inconsequential if someone else takes it from you.
We live in an economic system predicated on the financialization of resources. To understand the economic value of something you produce, you have to know the value of the inputs too. That applies to time just as it does materials. When you can quantify and grasp what an hour of your time is worth, then you can make decisions on how you allocate it.
The easiest way to do this is to calculate the value of an hour of your life by dividing your income by the number of hours you work in a year. This method of calculation was made popular by Vicki Robin in her book Your Money or Your Life. (And there’s an interactive calculator on her website here).
Take your after-tax income rather than your salary and divide it by the number of hours you work in a year. It’s important to use your after-tax income because a significant portion of your earnings is siphoned off by taxes. It’s money that you earn, yes, but if included in this calculation, it inflates the value of your time.
To show this calculation in action, let’s say you make $100,000 and you live in New York. After taxes, your cash inflow is actually closer to $70,467 a year. That figure represents how much your life is worth based on the number of hours you are willing to trade in exchange for that income.
For the sake of this example, let’s also assume you work the average American work year of 1,811 hours. When you divide your take-home pay by the amount of time you work, the value of an hour of your life would be:
$70,467 / 1,811 hours = $38.91
What does that look like? Below are some common expenses to provide you with a bit of context:
A $40 restaurant bill — think a cocktail and a cheapish entree — costs you an hour of your life.
The average American spends $91.75 per month on Amazon. That’s equivalent to trading 2.36 hours of your life to Amazon.
The average monthly car payment for a new vehicle is $729. That’s equivalent to 18.74 hours of your life.
The average cost of rent is $1,702 per month. That costs 43.74 hours of your life.
The only problem with this example is that the average American worker is not earning $100,000 per year. Approximately 18% of Americans command a six-figure salary. That means there’s a very good chance the value of an hour of your life is worth less than $38.91.
A lot less. Let’s assume your salary is $50,000 in New York. Your take-home pay is closer to $37,000 per year, reducing the value of your life to $20.55 per hour.
That isn’t a lot. And that’s by design. You’re playing in a game designed to extract the most time from you for the lowest dollar possible. So long as you don’t know the value of your time that’s easy to do. But once you understand how much your time is worth, you can begin taking action to reclaim it.
Final takeaway.
Time is not abundant, nor is it replenishable. There are only 8,760 hours in a year. Of that, one-third is spent sleeping.
There’s a popular belief that if you just work harder you can improve your life and the life of your family. To some extent, that is true. You can work harder. But there are only so many hours in a day when you can do that. Eventually, you’ll reach a limit to how much you can work. The quality of your work loses its value, especially when you’re competing with machines and computers that can work 24 hours a day, seven days a week, 365 days a year.
It’s not about working harder. You have to learn how to play the game. If the game is about time, you need to increase the value of the time you have to sell.
Economics isn’t just about generating revenue from assets or crafting policies to distribute resources. It’s fundamentally about time extracted from labor. It’s about how much time goes into producing something and how much time has to be spent working to earn enough money to purchase it.
For the average person, economics is about working and consuming.
The critical resource being exchanged in the economy is about time, not money. U.S. dollars are simply a common metric to define economic value the same way degrees Fahrenheit is used to measure the temperature outside. The money in your bank account — or debt looming on your credit card — doesn’t have value; it merely assigns value to something else — your time.
So how do you play the game then? How do you reclaim your time?
You must first become aware of how much your time is worth. Only then can you stop selling it for such a paltry sum of money.
There are a couple of ways to do this. You can reallocate your time toward studying to earn more per hour. Maybe you do this by going back to school or maybe you take a bootcamp to learn a new skill. You invest time today to be able to earn more tomorrow.
Another way to reclaim your time is to work less. This is already happening with remote work and it’s one of the reasons why corporate executives are forcing workers to return to the office. When enough people work less, they increase the value of their time. This simultaneously increases the costs of goods and services offered in the economy. It makes it more expensive to consume for everyone, affecting the corporate bottom line.
The most important thing you can do right now, however, is to just take stock of what an hour of your life is worth. Whether it’s $20 an hour or $200, only when you can quantify it using a metric you are already familiar with — money — can you say ‘No’ to things that don’t add value to your life and ‘Yes’ to the things that do.
That’s the ultimate power. The power to choose.
You can’t exercise that power, however, when you don’t even realize you have it in the first place.