Archive for April 14th, 2011
My Stab at Economic Theory
Lately, I have been reading a lot of books about economics. I know that reading a lot about something doesn’t make me an expert, but I’ve really been wondering about the value of things, and sometimes, I wonder if spending a certain amount of money on entertainment would be worth the amount of joy I’d derive from it, so the other day I came up with a formula to figure it out. Just for fun, I decided to take a stab at quantifying the whole thing, though I do not believe that it is a good idea to put numbers on everything. I did ejoy trying to think like an amateur economist though. Here is the result:
First, take your hourly wage, and figure out what percentage of it you would be willing to spend on entertainment. For example, if you made minimum wage, and you were willing to spend 10% of your income on entertainment, you would take $7.25, and multiply it by 0.1 (to figure 10%). You would get about $.72, then you would multiply that amount by the number of hours that you plan on spending with the book. If you were thinking about one of Brandon Sanderson’s books, you could look forward to about 20 hours of unadulterated, epic fantasy and joy, so you would multiply $.72 times 20. You should be willing to pay about $14.40 for the book. A variable on the formula allows you to multiply the ideal price of the book, by the number of people who are going to read it, so if your roommate, Joey, is going to read it, then you could pay $28.80 for the privilege of owning the material in question–assuming you like Joey.
This formula varies widely, specially when related to disposable income. Some people may make more money, but be unwilling to spend a lot of it on entertainment, others may make less, but be able to spend it more freely.
The other factor is that this works only for books you read for fun. Text books, or self-development books may be worth more for some people.
Here is the formula (I’m not a mathematician, so correct me if I expressed it wrong, and feel free to send the right one):
((HW*X) FT)) P=IP
HW = Hourly wage.
X = The percentage (in decimals) you are willing to spend on entertainment.
FT = Fun time the ride from the book.
P = the number of people, you like, who will have access to the book.
IP=Ideal price of item
What do you think?
I got the image from the Wikipedia and it is in the public domain.
