The Economics of Doing What You Love

DESCRIPTIONWolfers finishing the 2008 Stockholm Marathon

Marketplace, the economics program on American Public Media, is running a fun series this week — asking economists to reflect on how thinking like an economist can shape your personal decisions. While the pieces are pretty light, it’s also a neat opportunity to teach some simple economics. Yesterday, it was my turn, and so I focused my economic lens on my marathon training. And thinking like an economist means thinking in terms of opportunity cost.

When I analyze the opportunity cost of running, it turns out to be surprisingly expensive:

As I spend my hours slugging out the miles, I’m forced to confront my choices. Instead of sweating it out on the trails, I could take on extra teaching and earn a few extra bucks. And so going running costs me good money. By my calculations, my 16-week training program comes at an opportunity cost of several thousand dollars. A quicker runner would have a smaller opportunity cost. It’s only because I’m both slow and an economist that I fret that the world’s cheapest sport is actually incredibly expensive.

But despite this cost, running is still worth it. Why? There are many other choices that non-economists make that come with an even worse cost-benefit ratio. The true advantage of thinking like an economist is that it can help you make better decisions:

To an economist, the choice is still a no-brainer. We think you should only do what you love, and pay for it by doing what you are good at.

By sticking to economics, I make time for running. Rather than spend hundreds of dollars worth of time cleaning my house each Sunday, I hire a cleaner who does a better job at a better price. When a friend asks me to help them move, I write them a check to pay professional movers instead. It’s just more efficient. And while it can be hard to forgo extra income for a long run, it is even harder to justify wasting that time on Facebook. And with the time that saves, I’m pulling on my shoes to head out for another run.

You can listen to the full commentary here.


Quinton

So, Would you like to help me move?

I think this sort of opportunity costs analysis works best for personal activities. The moving example in particular strikes me as problematic. The benefits of spending time with friends, that shared experience, would seem difficult to quantify and something you might ultimately wish for more of later in life (running may prolong life though). There's also a cost, albeit one of the social type, associated with providing a check instead of labor.

That said, I imagine many of your friends understand your highly analytical behavior and thus you have self-selected friends who would minimize any social costs associated with your behavior.

Eric M. Jones

Opportunity Cost is the wrong tool for the job. What a poor world we would have if the purpose of life was the maximization of our bank accounts. There are names for people who attempt it and they are not nice.

The purpose of life is to feel good in your own skin. Money is nice but it is not the name of the game. To be rich and miserable is not so uncommon. It is to be avoided.

Keep running, or buy one of those continuous lap pools. Better for the knees.

Tara Stiles

Would be interesting to also factor in the savings/expense of less or more health care you'll need due to your love of running. If you stay injury free you may prevent several health problems in the long run, and save on medication, hospital bills, and stress. If you become injured, there may be more health care bills. Improved mental health from running may also factor in decision making and life choices, which may lead to improved concentration, higher productivity, and higher income. If you picked up an extra teaching gig during your running time, you may become exhausted and stressed which could lead to poor health habits and eventually disease.

Caliphilosopher

This goes to highlight that doing things efficiently doesn't always mean that someone is living life to its fullest.

Vic

As a grad student in applied economics many years ago, where I first learned the formal notion of opportunity cost, I was eager to try out these ideas. So I offered a friend (majoring in chemistry) the taxi fare back to our building from an auto repair shop where he needed to drop off his car rather than drive him back. As I tried to explain to an increasingly irate buddy why this was the correct approach, I recall thinking that this idea did not translate well into practice. It does work well for tradeoffs in allocating one's own time between activities (should I run or should I teach) or when the alternative is a commercial transaction like hiring a cleaning service. Friends value fairness (he would have happily offered me a ride if I asked), signals of commitment to the friendship etc. Which is why the field of behavioral economics is getting more attention.

keith

Do you experience the endorphin release commonly referred to as "runner's high", and if so, what would the cash money opportunity cost to induce a similar feeling by other means?

Michele

to Eric (#2) -- Research has cast serious doubt on the conventional wisdom that running is bad for your knees. There was even a study that directly compared the rate of osteoarthritis of the knee in runners and swimmers, and the runners' rate was lower. You might want to check out these links:

http://well.blogs.nytimes.com/2009/08/11/phys-ed-can-running-actually-help-your-knees/

http://www.ncbi.nlm.nih.gov/pubmed/4028541?dopt=Abstract

Ian

You forgot you gained some health benefits from running that equate to a longer healthier life, which are worth something. Either look at everything or nothing. Its not as simple as opportunity cost.

Ed Haines

The mathematics of opportunity cost/benefit associated with running are so fraught with black swans that it is foolish to attempt to apply gaussian mathematics here. To mention a couple of the black swans, consider cost of getting hit by a car, being struck by lightning, meeting one's "lifemate", or other highly unlikely events that completely change the system being evaluated.

C.A. Baker

This reinforces my belief that having money makes you happy because it can buy you time to do things that entertain you. Many people would hire movers, if they could afford it.

Ed Kay

Mythological persistence once again invades economics. This time its that "running may prolong life". Even non-runners believe this. When Jim Fixx died at age 52, the runners all locked their arms and ran roughshod over the facts, loudly proclaiming that Fixx was an aberration. But of course, he was actually typical of his kind of extreme running.

To those concerned about the increased medical costs to society of these extreme runners, "Take heart". Their drastically shorter average lifespan should more than offset the extra medical costs while they are still alive.

John Johnson

What leads to happiness? Opportunity costs lie in many more dimensions than that of money alone. #10 above reduces happiness to entertainment, #1 includes shared experience as a major factor. Either may be correct for their own lives, which further supports the Author's perspective on why running is a valuable choice for himself. The result of this, however, is that it illustrates the uniqueness and individuality of everyone's personal composition of behavioral economics, and the difficulty in attempting to generalize economic principles across a population with any degree of accuracy.

Matt Huggins

Oscar Wilde is said to have observed that "[t]he cynic knows the price of everything and the value of nothing."

In offering a friend cash to hire professional movers, you have mistaken your labor under the circumstances for a commodity. You have failed to perceive that, to the unique market that is your friend, your integrated set of services as companion, co-laborer and non-cash provider are a scarce resource quite likely worth more than the movers' services or cash you offered.

When it comes to loving one's friends, the fungible is rarely an adequate proxy for the particular, and attempting arbitrage between the two is rarely feasible or advisable.

Alan Moerdyk

I'm no economist but the best decision I ever made was to reduce my work hours. This was at a very stressful time in my professional life that would probably have led me to quit my, well paid, job otherwise.

So I now use my off time for classes at a local community college, mostly in music and theater but I also know a little about welding and blacksmithing now.

I do occasionally wish I had my "lost" pay back but my life is not poorer for the loss.

Joshua

As a long distance runner training for a marathon, and a junior economist (BA with thoughts of an MS or PhD), I understand the value of giving up something to get the miles in. In my case, it's not money, but rather sleep. Summer in Texas (Dallas) get's really hot and humid very early in the morning so we meet at 5am three days per week. What I get in return I find difficult to equate to dollars. My training group (upwards of 200 people divided into different pace groups) provides camaraderie, motivation, and some laughs. We're all experiencing similar high's and low's with regard to being tired and sore. I don't have to get up at 4am to begin stretching, but it's a choice I make, and without regret.

Paul

I approach these life-maintenance tasks a little differently.

The things I enjoy I don't factor an implicit wage rate.
The things I'd rather not do I factor my normal hourly (day-job) wage rate.
The things I hate doing, I factor a time and a half rate.
If that implicit rate, along with my estimate of my time involvement exceeds the cost of hiring out, I hire out.

I also hired a friend to help work on my house and insisted on paying him, telling him upfront, I wouldn't be willing to help him as quid pro quo in the future.

htb

The "opportunity cost" calculation assumes that if you weren't running, then you would definitely teach more (for pay), which is generally not a valid assumption.

A lot of people justify hiring work done on the grounds that "my time is worth $X per hour," and then absolutely waste the hours that would have been spent washing the car, cleaning the house, or running on entirely non-productive activities -- usually by sitting in front of a television. The end result is that they've lost money, and squandered their leisure time.

jac

I think your analysis overstates the opportunity cost of your time spent training. It does not really matter what you could be doing instead of training for a marathon. What really matters is what you would be doing instead of running. In other words, what is your next best alternative to running? My guess, and it is only a guess, is that your time spent running is not the reason why you have not picked up an extra class. The real cost of your training is probably either time spent with friends and family, of time spent doing a different leisure activity. So relax and enjoy your training.

misterb

In doing your opportunity costing, did you account for the externalities? Such as perhaps your partner's wishes in how you might spend your time? I think that economics might have a better reputation if so many of their calculations weren't so incomplete.
I think there are many husbands who are happy to help a friend move rather than writing them a check because they get to choose what they are doing, perhaps that's behavioral economics.

Greg

I think that you're overestimating the opportunity cost of running because running probably doesn't preclude your thinking at the same time. If you can do work by thinking at the same time as you're running, the opportunity cost may be negligible.