We all have heard of time value of money. Money left on its own will lose its value to inflation. That is why it is not a good idea to leave a fortune to your grandkids in hard cash. Traders and investors often talk about opportunity cost of their trades and investments. For example, if a trader has an option to take a position in one of the two stocks in front of him. The one he chooses goes up by 5% and the one he didn’t choose goes up by 10%, then the opportunity cost of that trade has been 5% returns.
To give a much simpler example, let us say there are two good football matches going on at the same time; Manchester derby and El classico. Then the opportunity cost of watching the derby would be El classico and vice-versa.
Let us say you work for 10 hours a day and get paid about 1,000 rs per day. It is not uncommon for someone to spend about 2 hours per day on smartphone. So that means it costs you roughly 200 rs per day to use the smartphone. thats about 1000 rs for a 5 days work week. About 4,000 rs for a 20 days work month. about 50,000 rs for a year. That is just the time value of the smartphone, The cost of device, internet etc are additional.
In a very interesting documentary, Anton Kreil talks about ditching the smartphone. Though I realized that it is not practical for me to do so, it made me think of all the time I spend on mine. I realized that a lot of notifications I get are simply not that important. While writing this article, I have received following notifications:
A news story telling me how excited investors are for IPO of Jack Ma’s ANT. This is not a ‘news’ per say. A notification telling me price of USDINR. I know what the price is, because the market is open and the chart is in front of me. A notification telling me day’s weather. I live in Mumbai. Its either hot or very hot. Nobody needs a notification for that. There are about 10 more. But writing about them defeats the purpose of writing about time value of money.
My earlier example of 50,000 rs was just to drive home the point. It doesn’t directly cost you money equivalent to your hourly salary to use the smartphone. The cost is more nuanced than that. You could spend that time doing things that could potentially increase your income like learning a new skill, building a business, creating another source of income etc. It could also be spent on exercising, pursuing a hobby, learning to cook healthy meals, or simply chatting with friends and family. In short it could be spent on your physical and mental health. It will keep you fit and save some long term medical costs. And a rupee saved is a rupee earned.
Pretty much all the platforms on the internet today are specifically engineered to keep maximum number of people on the platform for maximum amount of time. Because many earn their revenues from advertising, advertisers like statements such ‘An average user spends 35 minutes a day on our platform.’ It is similar to a billboard company next to a busy highway stating that roughly 10 lac people travel along this road everyday. These platforms are addictive by design. Since we know that we need to make sure they don’t enslave us.
I have no beef with the concept of smartphone. It is a versatile tool which has the potential to do a lot more good than harm. But it is just a tool. With very high opportunity costs. We don’t get enslaved to the hammer in our toolbox. Then why let smartphone do it?