Why thinking like an Economist is integral to business and life success

(Photo taken by Gavin Mettam. Armidale Pine Forest)

Economics is primarily concerned with scarcity. Specifically, a limited amount of resources to satisfy our (collective) unlimited amount of needs and wants. Think of it like a see-saw in a playground. A balancing act defined by the laws of physics. Put more or less weight on one side, the proportionate difference in the other side will determine, respectively, how far one side falls while the other side rises. This is what economists like to call 'Opportunity Cost.' The cost of making one decision will be the opportunity lost in forgoing the other decision. Or put simply, the real economic cost of a cup of coffee for say, $4.00, is both the $4.00, and the alternative ability which has been lost to spend the $4.00 elsewhere or to invest. Alternatively, non-priced economic benefits of this coffee to the specific individual could entirely outweigh this cost. Likely it's taste and caffeine impact! Every individual weighs up these benefits and costs to consumption every day, generally automatically (especially for my morning coffee routine!).

Now, apply this simple concept to Time. Time as a resource fits perfectly with our definition of scarcity. Time is finite - there are only 24 hours a day, 7 days a week, and unless Artifical Intelligence really gets extreme, our lives are also finite. This makes time an extremely valuable resource. Most people will subconsciously consider the value of their time when performing tasks. In business, this time is generally counted in order to provide a basis for charging clients across many industries. So, what is the cost of your time? How much value do you place on your leisure activities? A wise man once said, you never sit back during Christmas and talk about your best day at work during the year. You're probably too busy enjoying the beach!

What is the point of all of this talk? It's about trying to be smarter with our time. Making everyday tasks more efficient, in both work and time outside work. If we can manage to spend less time doing the same thing, for the same result - then we will have more leisure time, or alternatively that time can be applied to create better business opportunities. What we economists like to call 'Productivity Gains.'

When you are next at work, have a little ponder about these terms and what they might mean to you. Or maybe spend that time creating more efficient work practices. It's your choice!

Here at Integribooks we focus less on recording our time, more on saving you time. We can develop a specific understanding of your business to assist you in creating your own productivity gains.