Bad News: Higher Income = Less Leisure Time?

51 Comments

There may be no such thing as too much money, but there is certainly such a thing as too little time.

How does one of my best friends make several $100,000 USD per year as an investment banker but have less than two hours per month for his dream car, which sits gathering dust in his garage?

Let’s look at the numbers…

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…when you compare modern Americans to their 1965 counterparts—people with the same family size, age, and education—the [leisure time] gains are still on the order of 4 to 8 hours a week, or something like seven extra weeks of leisure per year.

But not for everyone. About 10 percent of us are stuck in 1965, leisurewise. At the opposite extreme, 10 percent of us have gained a staggering 14 hours a week or more. (Once again, your gains are measured in comparison to a person who, in 1965, had the same characteristics that you have today.) By and large, the biggest leisure gains have gone precisely to those with the most stagnant incomes—that is, the least skilled and the least educated. And conversely, the smallest leisure gains have been concentrated among the most educated, the same group that’s had the biggest gains in income.

Aguiar and Hurst can’t explain fully that rising inequality, just as nobody can explain fully the rising inequality in income. But there are, I think, two important morals here.

First, man does not live by bread alone. Our happiness depends partly on our incomes, but also on the time we spend with our friends, our hobbies, and our favorite TV shows. So, it’s a good exercise in perspective to remember that by and large, the big winners in the income derby have been the small winners in the leisure derby, and vice versa.

Second, a certain class of pundits and politicians are quick to see any increase in income inequality as a problem that needs fixing—usually through some form of redistributive taxation. Applying the same philosophy to leisure, you could conclude that something must be done to reverse the trends of the past 40 years—say, by rounding up all those folks with extra time on their hands and putting them to (unpaid) work in the kitchens of their “less fortunate” neighbors. If you think it’s OK to redistribute income but repellent to redistribute leisure, you might want to ask yourself what—if anything—is the fundamental difference.

From economist Steven Landsburg

Related Links:

The Karmic Capitalist: Should I Wait Until I’m Rich to Give Back?
Wealthier Than Thou: Is it enough to be rich, or must others be poor?

Chapter 2 – Rules That Change the Rules: Everything Popular is Wrong
Mail Your Child to Sri Lanka or Hire Indian Pimps: Extreme Personal Outsourcing

Odds and Ends:

Tim Ferriss one of Fast Company’s Most Innovative Business People of 2007
USA Today Cites 4HWW in #2 Trend for 2008

Tim interviewed in Japan’s Nikkan Gendai

Posted on: January 8, 2008.

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51 comments on “Bad News: Higher Income = Less Leisure Time?

  1. “If you think it’s OK to redistribute income but repellent to redistribute leisure, you might want to ask yourself what—if anything—is the fundamental difference.”

    Great point. Although, the people who love high progressive taxation will ignore the real point being made and plunge on with their love affair with big government.

    All I can say is “Go Ron Paul!”

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  2. Tim – I can relate. I’m in the investment banking biz and I make several hundred grand per year. I see a lot of folks in this business buying fancy cars, houses, etc and they have no time to enjoy life outside of the office. I think people get addicted to the business and forget about their kids. It is quite sad. I LOVED your book and I am using the strategies to reduce the amount of time this job requires, and I give it all back to my family.

    Cheers.

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  3. Great post, Tim. I suppose each of us has that question to ask ourselves how much is enough in each category of our lives, and where that amount should level. I know some people who are “well off” by most standards of today but are utterly miserable with their lifestyles.

    Congratulations on “most innovative business person”! When I see the points you make, it appears that it is from the less-than-obvious observations on our lifestyles, where it was, and where its going, and making the logical assumptions of how our lifestyles are ever changing. I can picture you being hit by a huge epiphony when it all began.

    In that case, you should also get the “best epiphony” award. Provided this award does not greet you within the year, I will cook something up in photoshop and send it your way. :)

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  4. The studies I hear about on leisure time seem to be in conflict with all that I hear about television consumption. It seems we average 28 hours per week watching TV yet we have hardly any leisure time [http://www.csun.edu/science/health/docs/tv&health.html]. I venture to say the reason we’re unhappy and less fulfilled is because we spend our leisure time doing things that only distract us from the work we hate.

    Stop watching TV (low information diet) and you’ve freed up the equivalent to 36, 40 hour work weeks.

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  5. Interesting points, I would rather see a graph of the ratio of “Unused Income” to leisure time. It would seem ironic to work more, make more (in terms of money that you don’t spend), and not have the free time. It might be more to the point that the reality is a 100K person is still expending 100K a year, this may be a driver for some to stay on the treadmill? If the 100K person was expending only 50K a year then I bet the treadmill would quickly slow down, or after a gathering period stop altogether. I don’t think the real trick is making more money, and IMHO, I don’t think it is gaining more free time either, I think the simple trick is trying to make sure that if you are on a treadmill its at least one you somewhat like, and if you can try and create a ratio with a large enough difference in income to expenditure so that you can maximize your choices to get off a treadmill when you want.

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  6. hi tim,

    these are the types of articles and conversations that need to be shared more often. glad to see that educating is on the top of your list. being a colombian american, having lived in europe, hong kong, and australia, and traveling around the world with a backpack makes you reassess how valuable your time and life is. for the longest time i thought i was the only one thinking this.

    love the fact that you are an ‘aficionado del tango’. have you considered ‘cumbia colombiana’?

    cheers!

    olga

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  7. “If you think it’s OK to redistribute income but repellent to redistribute leisure, you might want to ask yourself what—if anything—is the fundamental difference.”

    The difference is, as you stated earlier, “By and large, the biggest leisure gains have gone precisely to those with the most stagnant incomes—that is, the least skilled and the least educated.”

    I suspect the “least skilled and the least educated” are still smart enough to recognize when they’re not getting ahead. If you were making $10/hr, would *you* trade going to your daughter’s dance recital for an extra $14 (after taxes)?

    Those with skill and education have the option either to work more and get paid handsomely for it, or to trade the extra income for more leisure time. Lots of people don’t have that option. And since there’s *no way* they’re going to get rich, they insist on the compensation they *can* get: their time.

    ###

    Hi Drew. I’m citing someone else, so it’s not me who wrote the bulk of this post. I just thought it would be a good thought-provoker :)

    But thank you for contributing!

    Tim

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  8. Dude!!! Your book rocks!!!

    My life is already better having just finished reading your book. At best, my previous (somewhat vague) plan for financial freedom has been reduced from twenty years to one year. At worst, it will take me five years. You just saved me 15-19 years of my life bro!!!

    Thanks for writing such an excellent and life changing book.

    Regards
    Adam
    Sydney, Australia

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  9. I read a really good article recently that talked about the rising inequality in income as being a bit misleading. The reason for this is that the cost of many goods and services have fallen so much in the past couple of decades. For instance, a solidly middle class couple might now be able to afford a 50 inch plasma because they’re relatively cheap whereas a while back they may have struggled to purchase a 25 inch TV.

    A Whole New Mind is a great read on this sort of thing and why people are increasingly seeking meaning in their life and work given how materially abundant we are.

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  10. Tim, you can pick better articles than this. People today work significantly more than they did in 1965. Maybe Landsburg counts anything done off the clock as leisure. If that’s the case then the people finishing their workday emails at Starbucks are just sipping coffee… yeah, right. Plus the assertion that leisure time is not having a job or being in between jobs by virtue of the fact of being the least skilled or educated is just plain ludicrous. Economists like Landsburg probably see prison as “leisure time” too. As for progressive taxation I guess you’d have to blame it on that old marxist Adam Smith when he first proposed it in “The Wealth of Nations”. Keep up the good work.

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  11. With Twitter, Tim isn’t succumbing to some evil force to take up his time. The whole ideology behind 4HWW is to use your time the way you want to use it. If it’s Twitter for Tim as well as everything else… then go ahead Tim!

    I like the Twitter widget, although I’m not a convert yet.

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  12. You’re right, everyone should get the leisure time they’re owed. Except in your example, that would correspond to everyone contributing their portion of the taxes based on what they get out of it. But we all live in the same places and under the same government, and all are contributing differently. The lady who says “I had my second kid to get the money for the first one” probably isn’t pulling her weight in that regard. Probably isn’t getting much leisure time raising two kids by herself though. Maybe the system’s already in place! =)

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