New Research and a Dirty Truth: Read This Before Chasing the Dollar


“You’re nobody here at $10 million,” said Gary Kremen, the 43-year old founder of, of Silicon Valley.

In the August 5th New York Times article titled, “In Silicon Valley, Millionaires Who Don’t Feel Rich,” he and others in the nation’s wealthiest 1/2 of 1 percent admitted to feeling compelled to work 60-80-hour work weeks just to keep up. Hal Steger, who’s banked more than $2 million and has a net worth of $3.5 million, echoes the sentiments of these “working-class millionaires” when he says, “…a few million doesn’t go as far as it used to. Maybe in the ’70s, a few million bucks meant ‘Lifestyles of the Rich and Famous,’ or Richie Rich living in a big house with a butler. But not anymore…

C’mon now.

I live in a nice part of Silicon Valley, and I do whatever I want for less than $5,000 per month. There are more metrics to consider. More important, I’m “happy” by all conventional measurements. But I’ll be the first to admit… it hasn’t been this way for long. Only in the last three years have I really come to understand the concepts of time as currency and positional economics. Before I explain how you can use both to exit the rat race and dramatically upgrade your Lifestyle Quotient, let’s look at some numbers… According to polls on this blog:

46.88% of Americans say they would need to make more than $200K a year to be happy

63.41% of Americans, assuming prices remained the same, would rather earn $50K in a world of $25K earners than earn $100K in a world of $200K earners

74.64% of Americans would rather get Fridays off vs. a 20% raise

Would you be happier if you were richer? A recent study published in Science by a group including Princeton professors Alan Krueger and Daniel Kahneman, winner of the 2002 Nobel Prize for his work in behavioral economics, indicates that annual income is less important than anyone could have guessed. In fact, it gets less important as the per-capita average continues to grow. Here are a few highlights that foreshadow where we’re headed:

-The ways in which people with high incomes spend their time tend to make them more tense and stressed than their less-affluent counterparts.

-If personal wealth does not necessarily lead to personal happiness, then how well does gross national income reflect a nation’s well-being? Not well at all.

-Economists can add another dimension to their measurements by examining an alternative currency: time, “the coin of life,” as poet Carl Sandburg called it. The study of income and happiness featured in the Science paper suggests that time-use — how one uses one’s time — plays an important role in personal well-being, so national measures of time-use might aid our understanding of well-being on a national scale.

In the study itself, they move into positional economics and answer the question: why does income have such a weak effect on subjective well-being? Here’s the science-speak, skip it if you want, and I’ll translate it below:

…a permanent increase in an individual’s income has a transitory effect on her well-being, [even though] relative standing would increase. …The increase in relative standing can be offset by changes in the reference group: After a promotion, the new peers increasingly serve as a reference point, making the improvement relative to one’s previous peers less influential. (24) Second, Easterlin (1,2) argues that individuals adapt to material goods, and Scitovsky (25) argues that material goods yield little joy for most individuals. Thus, increases in income, which are expected to raise well-being by raising consumption opportunities, may in fact have little lasting effect because the consumption of material goods has little effect on well-being above a certain level of consumption or because of hedonic adaptation. (26) Moreover, people’s aspirations adapt to their possibilities and the income that people say they need to get along rises with income, both in a cross-section and over time. (27)

Basically, even permanent increases in income have little effect on perceived happiness, as we compare ourselves to those above us, no matter how much progress we make. Material goods give us a short-lived happiness sugar high, and we seem committed to making ourselves miserable. That sucks.

What to do? There are a few ways to use the currency of time, and awareness of positional economics, to your advantage to beat the Joneses on new terms:

1. Focus on “relative income” — defined as hourly income — instead of “absolute income,” misleading annual income that doesn’t factor in time. If you assume a 40-hour work week and 2 weeks of vacation per year, estimate per-hour income by cutting off the last three zeros and dividing in half. Thus: $50,000 per year –> $50 divided by 2 = $25 per hour. Relative income can be increased by increasing total income for the same hours, getting the same income for fewer hours, or some combination thereof. More options with more life.

2. Determine your precise Target Monthly Income (TMI) for your ideal lifestyle — the goal of most rat-race income competition — and focus on structuring mini-retirements to redistribute retirement throughout life. There’s an excellent Excel spreadsheet here for calculations.

3. Determine your “where” of happiness. It’s not necessary to permanently move to a country with depressed currency, but even temporary relocation to a domestic (check out Forbes’ publisher Rich Karlgaard’s Life 2.0) or international location with a lower cost-of-living resets your peer group and positional economics barometer. Being perceived as rich often translates into perceiving yourself as rich. Neat trick and a hell of a lot of fun. Two of my top picks for positional resets are Argentina (see “How to Live Like a Rock Star (or Tango Star) in Buenos Aires”) and Thailand.

4. Develop appreciation in tandem with achievement. Subjective happiness depends on appreciating what you get as much as getting what you want. The first step to true appreciation is perception: cultivating present-awareness. I recommend experimenting with lucid dreaming as tested at Stanford University, in particular the “reality check” exercises of Dr. Stephen Laberge.

5. Develop competitive social groups outside of work. Participate in games outside of income mongering. Train or compete in a sport where income is a non-factor. That dude makes $1,000,000 a day as a hedge fund manager? I don’t care–his golf swing sucks and he has love handles. Here, it counts for nothing. Oh, and her? I know she just got promoted to national manager for IBM, but so what? I just scored 5 goals on her. In this world, I rule.

Don’t let rat racing be the only game you play against the Joneses. There is always someone willing to sacrifice it all to earn more, so let them. Just remember: it is entirely possible — in fact, common — to be a success in business and a failure in life. Take the red pill and think different.


Odds and Ends:

Winner of the Planet Earth DVDs: Will W. of “death of unions” suggestion, you are the winner! Please e-mail your mailing address to and point her to this blog post so she doesn’t think you’re nuts. Congratulations!

Where did I end up sending the 200 books to change the world? Based on your suggestions, I actually mailed out well over 300 to the following organizations: The Robertson Scholars Program at Duke, The Entrepreneurs’ Organization (EO) Accelerator program, the AERO experimental education center, The Kauffman Foundation, The Public Forum Institute, Vistage International, the YPO, and several women’s entrepreneurial organizations both here and in the US. Thank you for the recommendations!

Posted on: September 4, 2007.

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91 comments on “New Research and a Dirty Truth: Read This Before Chasing the Dollar

  1. Tim-

    I love your concept of “time as a currency”. Having just spent 2.5 weeks in Europe with my wife and kids this summer (all the time I could spare), I wish to God it had been 2.5 months. Also, having the day off for Labor Day yesterday was just a bit too nice. I had not seen “time as a currency” before, but when I read it on here it hit me like a ton of bricks. It is not just a currency, it is THE Currency.



  2. “Advertising has us chasing cars and clothes, working jobs we hate so we can buy s**t we don’t need”
    Fight Club is so quotable and an apt pop culture reference for aspects of the Four Hour Work Week ethos.

    I started my blog because I was amazed how many people would constantly question how on earth I could afford to travel (with style at that!) even though they ‘earn’ more than me.
    It is all about perspective – choosing to take that red pill as you say Tim.
    Do I want to live a life of purpose, amazing experiences and a lot of fun, or do I want to live to work a 70 hour week so I can impress a few other miserable over-worked-out-of-perspective people? The choice to me is simple.


  3. Tim, one of your most inspired posts to date! Impressive how you sandwich the word message between two video messages.

    I’m off to Las Vegas for 10 days. 2 days of work, then a week of crazy fun with my friends flying in from Australia…we’re gonna hike the west edge of the Grand Canyon, and I plan to make a few K playing poker.

    Keep leading Tim, you’re doing a great job!


  4. Tim,

    I’m a little disappointed by your last point. What if it wasn’t about winning, ever?

    “That dude makes $1,000,000 a day as a hedge fund manager? I don’t care–his golf swing sucks and he has love handles.”

    Ok, but if he’s having fun and is comfortable in his body, I’d say he still wins. I’d say you’ve won the game of life when you stop worrying about winning the game of life.

    And don’t take any mysterious pills!


  5. You stated, “Material goods give us a short-lived happiness sugar high”

    We must remember that if one continues to enjoy the short-lived sugar highs, one will end up with DiaBETes.

    If you re-arrange the letters a little you end up in debt (time debt, financial debt and relationship debt).


  6. Good advice, by and large, but I have one big question. From wht I can tell, you’re single; would your $5,000 a month be enough to sustain you in your preferred lifestyle if you had a partner and two children. Even if your partner worked and pulled in the same, would $120,000 be enough? Maybe you do have children and this is a moot question; maybe having a partner and children isn’t part of your preferred lifestyle. But for many people, it’s a part of their life, preferred or not, and the costs (education, medical care, entertainment, clothes, and so on) can be pretty crushing. To live in a district with good schools, or to live out of those districts and pay for schooling, often can’t be done on $60,000 a year; and considering that half of US households make less than $45,000 a year, it’s even harder. Yet most would consider their childrens education an important (if not THE important) aspect of their preferred lifestyle.


    Hi D,

    I agree 100%. I am single, but more than 60% of the case studies in the book have families. The figure doesn’t need to change much, but even if it does increase, it needn’t be the lifestyle limiter that many decide it to be. There are lateral options such as those the mothers and single mothers use in 4HWW. The main point I hoped to make was simply that we should have a basis for amassing hour and feeling compelled to be in constant motion. As long as you have a concrete number — a la for tuition, etc. — you are on the right track. None of the principles are limited to singles.

    Thank you for contributing to the discussion!



  7. A million isn’t worth as much as it did…so who cares? I went from Bucharest to Barcelona for a week. Transportation and accomodation? A mere $300 – meaning round-trip flight and 5 nights at a hostel. If you’re creative, money doesn’t matter that much. And acting like that serves you and makes you a better person in the process. You start to reconsider your assets.

    As someone brilliantly put it, when you’re on your deathbed, you won;t regret not spending enough time at the office.


  8. Hi Tim,

    Loved your book!

    Of course, now I’m in the midst of a mid-life crises!! I now realize what I am living a completely boring, unfulfilling life. Years ago, I outsourced most of the functions of my business. Yes, I had lots of time. And I was being paid PLENTY for the hours of work I put in. But something was still missing.

    Your book really made me ask myself: How do I want to spend my time? Pursue a more fulfilling career? Spend more time with my children? Learn a new language? Assuming I can free up hours per day (using the techniques in your book), what would I do?



  9. Tim, I don’t think I can do it. Skydive. Great vid but once you’re in a downward spiral of flips how do you get out of it?

    With regards to your post, I agree with developing outside social groups. However for me, my work has a lot of social group events and sports that I participate in. And it turns out that my CEO is the best football player or baseball player. He’s also the best at cards and poker. So it gets annoying trying to compete with him. Lol. But it’s always in good fun and every now and then you do get to shine regardless of what your title is at work.


    Zye out of Toronto.


  10. As I’ve been working through the book, I’m realizing that changing my own mindset is the biggest challenge. Gaining time freedom isn’t so much a matter of finding a way to make money with minimal time investment – there seems to be plenty of way to do that. It’s really about the process of liberating myself from my own ingrained concepts about the relationship between time and money.

    Judging from the success of this blog and the book, I’m not the only one struggling with this. Thanks for leading the way, Tim.


  11. As a professional in the wealth management field, this is old news. My charge to my clients is to get their finances in line with their passions, virtually all of which do not include “just make more money.” To paraphrase King Crimson, wealth is never the end in itself but a means to the end. What is the end? Hey, that’s for you to figure out. Pub’s like the NYT and others merely play along with the anxiety and fears of their readers and advertisers to boost their own bottom line, and to me that is the ultimate cynicism.


  12. Outstanding Post!
    Has come to a crucial and dynamic point whereby I am literally cutting everything down by the POUNDS. I bumped into an ex-partner of a business who still owes money and set up a fabulous restaurant…. but stressed as hell.



  13. I have a version of this conversation every week with people who come in my office – people who are completely convinced that another [X] dollars will materially improve their life and are willing to endure godawful working conditions to achieve them.

    We touched on this topic in conversation during dinner at CommunityNext and wanted to see where things are now; I’ve spoken with readers of 4HWW who still have trouble with the ‘last mile’ of fully integrating the lifestyle with their finances for lack of contacts/relationships who financial/tax professionals (who ‘get’ the 4HWW model).

    Have a few ideas myself on the topic, and it would be great to hear yours.



  14. I quit my job last Wednesday and hit Vegas for a weekend trip with my wife the next day. Today is my first official day as a freelance web guy/entrepreneur. As I read 4HWW last month I realized my dream lifestyle is to be home with my new wife and my dog and start planning our next snowboarding relocation while developing one of my passive income ideas. I don’t need more money, I just need more time. So I took the amount of billable hours I want to work in a year, and set my hourly rate to bring in the same amount I was making at my job before.

    “The coin of life”, that’s good stuff. Thanks for the post.


  15. Very interesting article. I’m very wary of self-help books and similar publications, but despite that, the 4HWW book kinda grows on me. Even if the super-human example of Tim really raises the bar, the links and practical advice are a better solution for the eternal doubting Thomas than all the “actualize your potential” drivel you hear otherwise — even if the message basically stays the same. As long as I get some tools to work with, fine.

    Speaking of tools, I’d like to read more on ways to actually achieve your TDI. The ones in the book seem to be aimed mostly at MBA’s, salesmen and people who really excel in some hobbies. No luck for the boring IT guy who only can make some money by investing large amounts of time.
    (And who has the additional problem of not as many potential customers as someone aiming for the US market)

    Still, Buenos Aires is calling…