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ECON103: Unit 3: Value of labor over time (ESSAY)

Essay: How value of labor has changed over time

Time is the most scarce and precious resource of humans. Everybody decides day after day what he does with his time. People with high time preference will do things that make fun in the short term but produce costs in the future. This is because they don’t care much about the future as they feel that their future is far away from them.

People with low time preference on the other hand will try to live every day in a way which ameliorates all their future days of their life. They are much more likely to save, plan, accumulate capital, knowledge and take care of their health. This is because they feel their future very close and intense. The think more about their future self, identify and care more about it.

As a result low time preference improves your life from day to day while high time preference makes it worse.

In general over time the value of human labor has increased along with the accumulation of capital of the society, human inventions and the division of labor. As a consequence in terms of human time, all resources should get cheaper for everybody.

The value of labor of people with low time preference increases more because they improve their skills more and accumulate more capital. They became more and more productive every day. In a contrast to this, people with low time preference become less productive from day to day as they do the opposite.

As our time has appreciated in value, it has become even more important to decide what to do with our time. Every hour we decide what we are doing and what we are not doing (opportunity cost).

The good thing of the increased value of our time is that we can now produce much more resources per man hour than in earlier times. We have more leisure left and more opportunities to spend it. We could work less without starving, or work the same creating more resources.

The bad thing on the other hand is the increased challenge to find out what we want to do with our life or leisure we won. As the value is subjective one has to find out what he likes in the first place. That can take some time and might be a process of trial and error.

One thing most people like is freedom: the freedom to decide what to do with their energy, labor and time. I believe what motivates people every day to go to work is the creation of freedom for themselves through accumulating monetary energy with their labor. The difficulty is finding the right time to exit process of accumulation for the future. If you work till the end of your life, there will be no chance to use all the accumulated freedom after all. As nobody knows how long he will live, you should at least change your job at some point and start doing some work you enjoy.

Good references to time preference and the connection to capital accumulation for the purpose of enjoying leisure time, I am thinking right now how best to enjoy my leisure time when I get out of government mandated quarantine. Freedom is not an easy concept to put into context, but I think you did a nice job, especially when considering 'the right time to exit the process of accumulation" - thanks for your essay, I enjoyed reading your take on this question of the value of himan labour