Dec

1

What is my purpose in life, or more accurately what is my comparative advantage?

I am half way through reading Heyne's Economic Way of Thinking which has been on my list for a while and it has sparked some thoughts about economics but also some thoughts on the bigger questions in life. There is no doubt in my mind that in markets and societies the rules of economics, competition, comparative advantage, low transaction costs, and free exchange all lead to the greatest good for the greatest number of people. But the question I pose is can these same rules be applied to ourselves to answer the big questions we face in life like, what should I pursue as a career, where should I live, should I marry and if so whom, how should I spend my time and doing what, what is my purpose,and where will I be at the end of it all?

As we go through life making decisions and choosing different paths the concept of opportunity cost is ever present, whether we acknowledge it or not. For each road we go down there is another forgone. If we chose to go to Harvard, we give up a chance at going to Yale. If we spend our time trading we give up maybe a job in sales, or time surfing or skiing. We chose what brings the most economic value or perceived wealth. There is a simple but deep definition of wealth in the book, and that is "that which we value." So wealth is a very personal thing, certainly not just money.

Another concept in life and economics that we encounter every day is that of scarcity. Examples of scarcity are everywhere; apartments in New York, school admissions for one's toddler, jobs in trading or openings at a college. Scarcity leads to competition as we vie with others to obtain the things we value. We spend time searching for apartments, studying to be better students and competing to be the best at our careers. But other things in our life are scarce too. The aesthetic things we value are scarce — a sunset over the ocean, the view of the mountains, dinner with your family or friends, reading a non-trading book, watching a fire crackle, time outside. These aesthetic things all have a time scarcity associated with them. Indeed time itself is ultimately our scarcest resource.

Can the economics concepts of scarcity, opportunity cost, competition and comparative advantage which I know to be the best as applied to markets and allocating resources, also help me the individual lead the best, happiest, fullest life I can? When I chose a career I balance the wealth this brings me against the opportunity costs, not only of other jobs, but of the value I place on leisure time as well as those aesthetic things mentioned before. So I suppose the richest among us will be those that get the most of what they value most. If this is a lot of money, so be it. But if you place high value on say fishing or taking walks with your wife and two year old, spending time doing that will make you a wealthy person. We all have to "pay the light bill," but with any luck there is time left over to pursue those things we value most. So I think economics can help in answering those big question mentioned earlier. Also it helps me to prioritize. Once you know what it is you really value it makes going about getting it easier.

Laurence Glazier comments:

A moment of futurology:

As we get deeper into the era where useful things can be produced ever more automatically and cheaply, unsubsidized jobs may become rare, even if shared out part-time. Passage to such a changed society is unlikely to be calm, however it will give people the chance to develop their creativity, an essence-ial part of us all which education quells until, if one remembers, retirement. And those who have jobs would consider it an immense privilege.

It is a future I look forward to (indeed there is no need to wait). Yet, as a chess master once said, "Between the opening and the endgame the gods have placed the middlegame." And society will resist being dragged by the wind of technology to this endgame, as surely as the artist, alone in the studio, resists looking in the pitiless mirror.

Laurence Glazier is a British musician, artist, philosopher, chessplayer and speculator.


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