Time is money!

There’s good advice. There’s better advice. And there’s advice for money. Which would you like more?

Usually people answer that they want advice for free, because why would they choose the one they have to pay for if they can get the same with no cost. But there’s a rationale behind getting advice for money: this advice is more likely to help you. When we pay for something, we want something in return, and if we pay for getting advice we actually follow this advice much more often then the free advice.

But why??? It’s the same piece of information that you get. Why would it make a difference which way you get to this information?

It is because of some psychological mechanisms of human beings.

When we pay for something, we let go of some money that we feel is made of our time, tears and blood. It hurts to let go of it and we would rather not. It’s called loss aversion, and is a natural mechanism in humans to hold on to what we’ve got because it hurts more to let go of it than if we got something equivalently valuable instead.

So when it hurts to pay for the advice that we get, we make a better effort at following the advice because we want to feel, that the “lost” money was worth it. If we don’t pay and we don’t feel like we lost anything, we don’t value the advice quite as much, and don’t follow it.

This is actually quite interesting when I think about some weight loss concepts like The Danish Weight Consultants, that tell you to eat exactly the same that the official government establishments do, with the difference that The Danish Weight Consultants charge a great amount of money every month for giving you that advice! And people do follow the advice and they do loose weight! 🙂

This is also interesting when I think about all the things people learn every day from websites and discussion forums where people share knowledge for free. If the knowledge was taken into use, the whole world’s population became much thinner, healthier and happier. But it looks like it goes the opposite way!

What can be done?

We can either start to value the free advice because we know that it is good too and not letting the loss aversion “get us” or we can look at ourselves and all the information we have taken in and that we don’t use. Was the time that we used on the subject worth it? If I get into a subject like diabetes and learn a whole lot about it, watch documentaries, talk to people about it and so on, then I have invested a lot in it, but the currency here is not cash but my time. The time that I could have used doing something else, and this time can be worth a lot. I need to remind myself, that the time I have devoted to the subject is very valuable and treat it well.

My suggestion is, that we need to start thinking in terms like “time is money”.

There’s a big difference in the feeling of letting go of cash and letting go of money.

Dan Ariely has done some experiments with cola cans, that he put into a fridge that was used by several students. When the money was represented in a form of a can of cola, then the students didn’t value it like money, and actually stole the cans from the fridge. They didn’t though steal the actual cash of the same value! So when something like money (who someone spent time on earning) looks like a can of cola, it becomes devalued.

The same analogy works for advice: if someone’s time, who spent it getting some knowledge, comes in form of free advice, it gets devalued too.

Explicit price tag is needed!

To help myself use my time in a better way I can try to remind myself of the “price tag” that my hours have:

  • Setting reminders about the shortage of the time that I’ve got could help. I’d probably activate some portion of loss aversion and hold on to what I’ve got.
  • Maybe asking myself a question: “If I pay XX to this expert to get that information, would I save any of my precious time?” This is actually a microeconomic term of alternative cost.
  • Maybe tracking time with a programme of a kind to get a grip on what I’m wasting time on? The actual meta-perspective on my own actions would help prioritize better.

What do you think?

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