The Superiority of the Online Marketplace

Many of us – myself included – believe in the virtues of what we call a “free market.” Most people think a free market is a market where the government keeps its hands off completely. In reality, a true free market requires far more than laissez-faire policies.  For the laws of supply and demand to actually work in equilibrium, markets requires (among other things) perfect information and no barriers to entry or exit. Perfect information means that a customer knows all of the alternatives, prices, features, etc. and makes the most rational choice. How often do buyers have perfect information in real life? Practically never. Most of us simply don’t have the time to visit dozens of stores and understand every single feature and trade-off for every product we buy. True free markets hardly exist in the United States or any other country, and – gasp – it’s usually not because of government intervention. Buyers lack information, and large sellers corner markets. The simple supply and demand intersection is a nice concept for Econ 101, but in reality a myth. Enter the Online Marketplace Even the most dedicated comparison shopper would have had a hard time obtaining anything close to “perfect information” before the rise of online marketplaces. Most online marketplaces now offer in-depth user reviews and price comparison with a few clicks. Information comparison has become a part of day-to-day shopping, and it doesn’t stop at retail anymore. Beyond the Amazons of the world we have AirBnB for temporary home rentals, RelayRides (among others) for peer-to-peer car rentals, Boatbound for renting boats (pier-to-pier, get it?), and Hire a Helper allows you to find and compare movers. Online...

Time is Money? Not if You Want to Be Happy.

“Time is money” – you hear it so often that you may have accepted it as true. For both rich and poor, “time is money” is a semi-official slogan echoing deeply-held values of productivity and hard work. With the acceptance of “time as money” and its values comes a sneaking question: “How much is this moment costing you?” For better or worse, the phrase seems to have taken on a life of its own. How Often “Time is Money” Appears in Printed Text The above graph shows that we’re using “time is money” in print more than ever. This concerns me deeply. Thinking of time as money inevitably leads to the fallacious conclusion that  the only non-wasteful thing to do with time is to spend it making money. Perhaps it’s the belief that time is money that has led Americans to work more than anyone else in the industrialized world. Even among those who have never heard of “opportunity cost,” the idea behind it is built-in to American culture. To us, taking time off always costs something. There is no virtue in leisure. Time spent merely relaxing, thinking, or watching television is widely viewed as a necessary evil when we just can’t make ourselves do something productive. Thinking of Time as Money Does Us Harm More and more, we are finding that thinking of time as money is harmful. A 2011 study by the University of Toronto shows that thinking about time as money dampens our enjoyment of the things we like doing. Study subjects who were subtly encouraged to think of their time browsing the internet enjoyed it...