Image may be NSFW.
Clik here to view.For many years during my undergraduate degree I was living on a scholarship alone and so learned to be a very frugal person. As computers and mobile phones got cheaper, I would always take advantage of that to get cheaper rather than better models when upgrading. Last year for instance I bought a basic smartphone for $100 and a netbook for $250. This year on the sage advice of Luke Muehlhauser I changed my approach and splurged on a MacBook and higher end Android phone. Having experienced both I realised that buying the cheap electronics was a false economy and that if I had thought about the decision properly I would have worked that out much earlier.
The reason is simple.
A high quality laptop cost me $1100 while a comparable low quality one would have cost me $500. I use my laptop an average of about 2 hours a day, and expect it to last around two years. Over its lifetime then I should expect to use it about 1400 hours. A high end laptop then costs $0.42 an hour over a low end one. I estimate that the MacBook’s design and reliability boost my productivity by at least 10%. Do I value a 10% productivity boost at $0.42 an hour? Given my wages and the importance I place on getting things done – definitely. And then there is the pleasure and serenity I get from using a well designed product on top of that.
Likewise, a good phone cost $200 more and I use my phone about half an hour a day and also expect it to last for two years so it comes to about 55c extra each hour of use. While I don’t use the phone as much, it is particularly valuable to be able to do what you need to do on your mobile quickly, for example when you are trying to find an event, some piece of information or a person you a meeting. The faster processor and better software on the expensive phone allow me to perform most tasks almost twice as quickly as on the cheap phone. This is certainly worth the cost.
My instinct without doing the numbers was that ‘to be frugal is a virtue’, but in order to save my money I was inadvertently a spendthrift with my time. In future I will divide the price of durable items like laptops into hourly costs as I have done above in order to make it easier to work out the best decision.
Tagged: back-of-the-envelope, economics, efficiency, evidence-based-life, psychology, rationality Image may be NSFW.
Clik here to view. Image may be NSFW.
Clik here to view.