Jon Steinsson and Emi Nakamura do not have enough time to do everything they need to do. They’re recently tenured, highly productive rising stars at Columbia University, as well as parents to an infant. But they have a secret weapon helping them prioritize: Econ 101.
One of the oldest, if not entirely intuitive, principles in economics is comparative advantage, developed by the British economist David Ricardo in the early 19th century. As introductory econ students all learn, it explains why countries and companies ought to outsource the production of lower-value goods and services, even if they can produce them more efficiently themselves.
Even if you’re faster and more effective than everyone else at a given task — fighting with the cable company, say, or folding your socks just so — you still might be better off if you pay someone else to do it for you. Why? Because there is an opportunity cost for every hour consumed by these tedious, nonproductive tasks; there exists some higher-value activity you could be spending your time on instead.
Steinsson and Nakamura, both economists, take the tenets of their field seriously. And so they outsource as much of the humdrum aspects of their personal lives as they can.
Last year, the couple hired a personal chef. She drops off five healthful meals at the beginning of every week to reduce the time they spend cooking (they used to cook recreationally; now they’d rather spend that time with their son). They have also paid people to: build Ikea furniture for them (even though the service often costs more than the furniture itself); teach them how to use software programs and baby carriers; and load their CD collection onto their computers. They even hired someone to spend hours going through thousands of old family photographs to figure out which are the “good ones.”
[. . .]
While it’s now common, especially in cities like New York, for professionals to hire a housekeeper and pay for some degree of child care, outsourcing other activities is quite rare and even stigmatized among noneconomists. Embracing the D.I.Y. ethos is (wrongly) perceived as evidence of thrift or even moral virtue. A personal chef is the sort of luxury people associate with hedge-funders, Europeans with several surnames and oil sheikhs. Still, you need not be an heiress to benefit from paying for a personal assistant or gofer of some kind. From an economist’s perspective, it’s similar to taking out student loans: an investment in your future earning potential. Yet few outside the field see it that way.
Part of the problem is that most people don’t understand the value of their time, particularly if they are salaried. Paying someone to buy your groceries or take the car to the mechanic sounds like money down the drain if you’re not billing hourly. But buying yourself an extra hour to work today can be good for your career tomorrow, if doing so improves your chances of getting a promotion or a raise.
Read the whole thing. Note that the structure of the tax code acts as a disincentive to outsource, which is yet another indication that the tax code is antediluvian in nature. (Story via William Easterly.)