By Kevin DeLuca
Disclaimer: the estimated average opportunity cost of reading this ThoughtBurner post is $1.22
I’ve been wondering whether blogs are valuable or not, so I decided to construct a way to approximate the opportunity cost of reading a single post. By reading any of these posts you are, of course, foregoing the opportunity to do other things – more productive things. If you’re reading this post at work, for example, you could instead be working and making money; if you’re reading this post in your college class, you could instead be paying attention to the lecturer whose salary you’ve already paid. You could also be reading this during you leisure time, in which case you are not losing money (by not working), but instead you are choosing to spend your leisure time (which has some value to you) reading this post (still a cost).
Since I have greater-than-zero readers, I can assume that the blog isn’t totally worthless. In fact, everyone who reads a post on this blog is at least willing to pay the opportunity cost of reading it. This means that your expected value of reading a post is at least as big as the opportunity cost, otherwise you wouldn’t read it in the first place. So, the opportunity cost of reading a post can be thought of as a conservative estimate of the value of any blog post.
But how much is the opportunity cost? Well, the answer depends on who you are and when you read the post. The opportunity cost of reading this while you should be working is much higher than if you read this during your free time. It also obviously depends on how much time it takes you to read a post; this is just a function of how many words there are and how fast you can read. This post has about 1,659 words, and on average, people read at somewhere between 250 and 300 words per minute (wpm)[i]. Next, all we need is a guess at how valuable your time is under certain scenarios, given that you could be doing something else.
For the sake of simplicity, I will first consider three different cases: an average U.S. worker reading this specific blog post during their work hours, an average worker reading this post in their leisure time, and a resident undergraduate student at The University of Texas reading this during class (many of my readers are my friends and many of my friends are or recently were UT undergrads). I’ll also base my estimates solely on the opportunity cost of reading the article, though a more accurate estimate would include time costs of analyzing graphs and looking at pictures and exploring the other articles which I’m sure you’re all doing.
- If you’re an average worker in the U.S. reading this while on the job:
Assume you make the median income in the United States, which is $51,939[ii]. Also, assume that you work an average number of work hours each year, which is 1,788[iii]. That means that you earn about $29.05 per hour worked, or about $0.48 per minute. Every time you read a blog post, therefore, your opportunity cost is $0.48 for each minute you read. Let’s assume that you’re a fast reader (300 words per minute) for more conservative estimates. Since this blog post is 1,659 words long, the opportunity cost of reading this article to an average U.S. worker is about $2.67. (Notice, however, that you still get paid for the hour worked, even though you stopped working to read this post. In a way, you have passed the opportunity cost onto your employer, who was technically paying you to read a blog post for a few minutes. Don’t worry, I won’t tell.)
- If you’re an average worker in the U.S. reading this outside of work hours (leisure time):
The value of leisure time is a tricky thing to estimate – it isn’t directly measureable and partly depends on your income. After reviewing this research paper[iv] by Larson and Shaikh (2004), it looks like estimates put it around $11.27 per hour (about $0.19 per minute) on average (see Table 4). This is probably a low estimate for working people and a high estimate for college students, since the former are more valuable than the latter (no offense). Using this estimate and average reading speeds (300 wpm), the opportunity cost of reading this blog post (during leisure time) to an average U.S. worker is about $1.04.
- If you’re an undergraduate resident college student reading this during class:
Probably not everyone who reads this is a working professional, and since I’m currently attending UT and have a lot of friends here I’m guessing that they’re mostly the ones reading this. College students’ time needs a different value estimate, since they aren’t foregoing work to read each article. If they are reading this during one of their classes, however, they are not taking advantage of something that they’ve already paid for. In this sense, they are losing money, and this is their opportunity cost.
I’ll assume that you pay the in-state, full-time student tuition. The lowest tuition charge is in the college of liberal arts at $5,047, so we’ll use that to form a lower bound of the estimate. Let’s assume that on average students take 15 hours, which means they’re in class for 15 hours per week. Each semester is 15 weeks, which comes to 225 hours per semester. The resulting cost per hour of attending a class at UT is $22.43, which I’ll round down to $22 an hour, or about $0.37 per minute. Again, we’ll use 300 words per minute, and this blog post is about 1,659 words long. In this case, the opportunity cost of reading this blog in class to a UT student is about $2.07 (and it will be higher for non-residents, non-liberal arts majors, and people who take less than 15 hours).
Not too bad! Looks like this ThoughtBurner blog post is worth somewhere between $1.04 and $2.67.
A Deeper Look:
To explore further, I created a few charts that provide opportunity cost estimates under a larger range of conditions. For example, as I mentioned above the economics literature suggests that people’s leisure time is valued differently depending on your salary or hourly wage. Also, I take into account the fact that different majors at UT pay different amounts for tuition, and out-of-state tuition is much higher than in-state tuition. Lastly, I provide estimates of the opportunity costs of reading other things, like a random article from The New York Times, a random Politico article, and the cost of reading certain books. The results follow.
Workers, In Detail:
Below is a chart of the opportunity cost of work and leisure time for each quantile of income earners in the United States[v] in both hours and minutes, and I’ve specifically calculated the cost of reading this post for each group. The calculations are made assuming a 300 wpm reading speed and working an average number of hours each year (1788). Leisure costs are from Table 4 in the paper referenced above.
UT Students, In Detail:
Below is a chart of how the opportunity cost of reading this blog differs across majors and in-state vs. out-of-state students. The calculations are based on a 300 wpm reading speed and a student who takes 15 hours (15 hours per week in class)[vi].
Since tuition costs are pretty similar given resident status[vii], there isn’t much of a difference across majors, but notice that the opportunity cost of reading this blog in class for out-of-state students is almost four times higher (because their tuition is almost four times higher). Also, the hourly opportunity cost for students is of interest because it could be thought of as the opportunity cost of skipping a one-hour class. On average, this amounts to $23.56 an hour for resident and $80.68 for non-residents. Moral of the story: DON’T SKIP CLASS! If you’re a UT student, you’re paying quite a lot per hour to be educated.
For the popular readings, I calculated the average opportunity cost for workers both during work hours and during leisure time for each item in the chart.
The NY Times article and Politico article were just the most recent links I found among my Facebook newsfeed. The Politico article was only 378 words, and the NY Times article was an opinion piece and was 1,180 words total. The average book, according to this[viii] article, has 64,531 words. And the entire Harry Potter series has 1,084,170 words according to this[ix] website. For those of you who have read the entire series during your free time, just know that it cost you nearly $800 worth of your leisure time.
It seems unlikely that you would read an entire book much less the entire Harry Potter series while at work, but, let’s be real, people read Politico and the NY Times all the time during work hours. Now we all know how much it costs our employers when we ‘take a break’.
Of course, you don’t actually know the exact opportunity cost of reading a blog until after you’ve spent the time to read the post. In the name of efficiency, I think from now on I will put the estimated opportunity cost of reading each post right under the title, that way everyone has better information before making their decision. Now, the problem I’m stuck with is how to get people to just direct deposit the money rather than reading ThoughtBurner posts.
[ii] 2013 data. http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf (Table 1)
[vi] In order to calculate weighted averages, student enrollment totals by department for in- vs. out-of state was calculated by assuming each department has the same proportion of students as the university overall. (79.7% in-state and 20.3% out-of-state).
Student Ratio Source: https://sp.austin.utexas.edu/sites/ut/rpt/Documents/IMA_S_StudentChar_2013_Fall.pdf