Tuesday, May 31, 2011

Tuesday rant!

No, I'm not just hungover and grumpy. Ok, maybe a little.

I read two things recently that reminded me of one of my pet peeves (and a warning here: after following the MTBR link, the rest of this rant is only very tangentially related to bicycles) - see if you can guess what I'm so upset about:

http://www.slate.com/id/2295603/

http://forums.mtbr.com/showthread.php?t=712995


Figure it out?

Well, here it is: people don't use math. They don't use it to solve simple problems, or give them guidance to make decisions, or for anything else if they can help it. This drives me bonkers. In one case, it's framebuilders who don't figure out what their costs are (hence reducing profits for those of us who do, and putting themselves out of business at the same time). In another, it's people who go for a job that pays a few extra bucks in exchange for a longer commute.

Now, let me be clear. I am not asking anyone to solve any differential equations, or find the slope of a curve at some point, or even figure out the area of a circle. I am just asking them to add, subtract, divide, and multiply. With a computer, a calculator, or a piece of paper and a pencil. Anything.

For example, people have reacted incredulously when I tell them that their 2 hour daily commute is worse for them than smoking a pack a day (the statement is deliberate hyperbole, but I'll show you why it's actually sort of true in a second). I ask them how long they think they'd spend over a 40 year career, if they had to commute 2 hours a day, and most people guess a couple of months.

Let's do the math.
-2 hours a day.
-10 hours a week.
If we assume 2 weeks of vacation a year (crappy job, but it makes the math easier):
-500 hours a year
Assuming you work for 40 years at the same job (again, to keep things simple):
-20,000 hours of commuting. That's 833 days, or 2.3 years.

Ok, so you've wasted over 2 years of your life sitting in a car, just to go to work. But it gets worse - the car isn't free, and in most cases your job won't compensate you for your commute, so:
-If you're averaging 40mph, you're driving 80 miles a day.
-400 miles a week.
-20,000 miles a year.
-800,000 miles in a 40 year career.

Now, gas and maintenance cost money. Of course, this varies a lot depending on your car, how you drive it, how well you maintain it, etc. But we can make a good guess, based on the rate at which cars age, costs of fuel, etc. Luckily, Edmunds (and others) have already done the hard work - so you can just click over to their TOC (true cost of ownership) calculator and see for yourself.

If I say I'll drive a 2011 Honda Accord sedan (a relatively efficient choice) the cost per mile is about 50 cents (and yes, I also chose that car to make the math easy). We'll do our math in constant 2011 dollars and assume fuel prices stay relatively stable (they'll probably go up, but that makes it much more complicated to tell the story):

-800,000 miles in a career at 50 cents a mile.
-$400,000 total cost.

Yes, I'm aware that most people *have a car anyway* and hence the additional cost of driving it to work isn't really 50 cents a mile. Let's say it's half that amount, so 25 cents a mile. We're down to $200,000.

But that $200,000 could be earning you money as an investment in something else - stocks, bonds, mutual funds, part ownership of a topless bar... so let's assume you invest your $5000 a year at 3% interest. Say, in municipal bonds or something.

-After 40 years of contributing $5000 a year, and earning a modest 3% on the principal, you've got $377,000. The difference between $377,000 and $200,000 is $177,000 - which is the opportunity cost of spending the money on commuting instead of investing it.

So commuting has cost you $377,000 over your career, a mix of additional fuel/maintenance costs (above and beyond the costs of owning the car in the first place) and lost income from investments never made.

Now, let's assume you don't really *enjoy* your job that much and are doing it primarily to put a roof over your head, food on the table, and save some money for retirement. $377,000 is a decent chunk of change:

-Most of my blog readers are smart cookies (well, maybe not if you're still reading...), so let's say you make $40/hour writing code, doing science, or managing a topless bar.
-That's $320/day.
-$1600 a week
-$80,000 a year. Nice!

But, uh-oh, you have $377,000 in commuting expenses to deal with - so you'll need to work 9425 hours to pay for it. That's 393 days, or 1.07 years of sitting at a desk.

But of course, you can't work 24 hours a day. Assuming you're still working your normal schedule, it'll take 4.7 years to pay that off (and of course you still have to commute to work!)

So we're at 2.3 years of sitting in the car, plus 4.7 years of extra work. That's 7 years of your life, essentially wasted. Years that you could have spent hanging out with your family, going on vacation, or watching Stargate SG-1.

So, how bad is smoking for you? According to numerous sources, about 11 minutes per cigarette. For the average smoker, that's 6.5 years over a lifetime.

Hence, to me, commuting 2 hours a day is worse than smoking. Obviously, this is a stretch - the 4.7 years you spent working to pay for your commute are better than being dead! Heck, sitting in your car for 2.3 years is also better than being dead. So yes, it's obviously hyperbole, but if you add things up, commuting by car (alone) does shorten your enjoyable life an amazing amount.

Now, to be fair, most people have limited choices when it comes to commuting, but they should demand MUCH higher pay for long commutes - at least, they should if they feel their lives are worth something. And all you middle managers? If you're not letting your employees telecommute as much as possible, you're wasting their lives, time, and money. You can look at the very simple math here and see why. Sitting in a box on a freeway is a waste of time for EVERYONE, so it would make sense to avoid it.

But nobody ever does the math, or at least that's the way it seems to me. They build frames for $400 and go out of business in a year, they spend their lives miserably trying to pay for their cars, and they never once think to sit down and use some simple math to guide their decisions.

So use math. It's not that hard. It works.

Edits:

-Yes, I know that the real-world calculations are more complex than this. The point is that you can use basic math as a tool to help give you useful information in making decisions. Commuting might be the right choice for you - but unless you've sat down and run the numbers, you'll never really know. Most people go with their gut - but their guts are often wrong.

-Yes, I am aware that making blog posts takes time. I type pretty fast, and I read pretty fast, but this one probably still took half an hour. I've posted 929 times or something like that, so if the average post took me 15 minutes, that's 232 hours, or almost 10 days of sitting at the computer! In my defense, I enjoy semi-creative writing (I consider the blog a hobby) and it also serves to promote my business. I doubt most people consider driving in traffic enjoyable or profitable.

-Here's another fun article (follow the link and read the research from the Philly Fed): http://www.slate.com/id/2295851/

20 comments:

Anonymous said...

One could argue that the internet is even worse. I spent 8 minutes (now 12) reading and typing up a response (that was promptly lost).

Housing closer to one's jobs often goes up exponentially in costs. It makes the math horribly complicated. For me, it's the housing cost is roughly squared closer in, plus higher insurance, plus higher (city) crime, taxes/etc. I gave up a 15-18 minute commute(20 on bicycle) for 3x the space, a premier trail in my back yard, better school systems and cleaner air. Commute is now 30-35 minutes and around 75 minutes on bicycle. Of course, when I drive in, I often bill my time as I spend it on the phone listening to a conference call...

-B

Anonymous said...

p.s.
Great post! Everyone should evaluate life's activities this way from time to time.

Walt said...

Anon, I think you're an example of what I'm talking about. Unless you live in a homeless camp near downtown Tokyo, housing costs are most certainly NOT "roughly squared" closer in ($1000/month where you live, $1,000,000/month near your job? Really?)

Everyone's priorities vary, of course. You're giving up years of free time in exchange for your bigger house. Do that math, bro (or sista)!

Unknown said...

What if you are listening to books on tape (do they still make those?) or learning a second language while you do your daily commute?

Does that subsidize the wasted time in the car?

:)

Unknown said...

PS, +1 on the great post.

Anonymous said...

When I switched jobs 2.5 years ago, I saved over 5 hours of commuting time a week...I had so much free time in the evenings it was crazy, I could get home in time to eat with the family, help out with the kids, make their school events, get more riding time in. It was a complete life changer.

Buzz said...

hahaha! Very funny post Walt!

Do a post on 'hopium'...you know.. "The Audacity of Hope" kind.

How about one on the math of peak oil: We live in a gear head car freeway culture built on cheap oil. Use up "our" oil and we have to use our imperial might to get " their" oil. 2-1=1?

How about the math the smart guys at the corps use to add bottom line by minimizing expense offshore. That's legite right? Or those insurance companies that make massive profits by blowing fear smoke up our rears for our whole lives!! Or the really smart ones like Greenspan and his pals at the Fed who created all those 'new instruments' to fund the "ownership society". On and on. I say....... @#$k math!

:-)

Do not do a post on the ROI of drinking beer!! Please!

Buzz said...

Nothing like a good rant! And factual too, so double the fun.

One might note that humans have been commuting for millennia. The food didn't walk into our caves; we had to go get it. Scenery was better though.

steveo said...

Getting back to a small part of the solution, while tipping my cap to science. Walt could you recommend some books or other references on the physics of bicycles. I'm looking for the equations involved with power, efficiency, friction weight, inclines, effect of wheel size on gear ratios, ect.

Brad said...

Same house, property near work is $1.5-2+ million (3k feet, ~1 acre, pool, heavy trees). $400k 25 miles out. So right, I mis-spoke not nearly squared. I won't even address the fact that I don't *need* this place, as I know I don't.

Prior average drive time was 15-18 minutes. or 4.97 miles. (20-25 on a bicycle) Drive time this morning was 31 minutes, or a delta of 16 minutes. On average, I drive four days per week and work from home one.

This morning, I was on the phone with a conference call 100% of that time; in which I billed. My only 'cost' was wear and tear/operational on the car. The price of the car was paid off by an insurance claim in 2006, which was 2x(after I rebuilt it) what I paid for used in 2005. Presently, my estimated annual gasoline bill is still cheaper than food, insurance/etc runs this cost up.

The money more or less negates itself. I can't/won't make the same income at home. I tried for 8 years. I can pay the mortgage off in less than 7 years by working for someone else, vs ~20 working for myself. The interest saved is substantial, even at 4%.

I do agree with you on time 'wasted', which is why I chose to work a job that I can work from home part of the time or be flexible enough to time/schedule my commute to do something I can bill.

I spend more time reading blogs and forums than I do commuting. One could argue that I often learn more from NPR on my commute than I do reading on the interweb.

Based on how active I see you *everywhere* and the quality of most of your posts I suspect you also spend more time on the internet than I do commuting. As you said, it's all about priorities.

-Brad
p.s. sorry for the anon.

JS said...

Walt, I loves ya, but our world doesn't operate on mathematical logic. It should, but it doesn't.

The logic/calculous of most of our lives are based on jumble of mostly unvoiced, heavily weighted, qualitative factors. Those factors of course stem from all that is horrible and distorted, our perceptions, fears, neuroses, and privilege. I mean eventually math catches up with ya', but who cares right? You got to play big shot, or had a nice house, , drove an Audi on a teachers salary, or got to build bikes and coin catchy acronyms, or whatever.

We use math not to consider our situation, but only as tool for justification (as Any' B beautifully illustrated). It's just stats for the commoner.

Now... I think I'll go back to starring in my own personal romantic-comedy. Where are the keys to my Audi?

Nick O. said...

I'll stay out of the economics of it...but I got laid off a few years ago. I had to take whatever job I could get. It ended up being a 30 minute car commute with no traffic. That typically was 1 hour each way during actual work days. I really could feel my life deteriorating. I didn't know what was causing it...I thought I was happy listening to music and NPR to and from work.

I ended up joining an online dating website to see if I was just missing a mate. (ha...yeah) Got a girlfriend...and broke up with her quickly, because I found that wasn't what I was missing.

I was doing a poor job at work (almost got fired actually), and even biking after work didn't make me feel better about it.

I found that my depression was directly related to my commute. I found myself cursing at every slow creep to a brake slam in traffic.

I then got out of that job after 7 months for a commute about half as long. I started feeling a bit better. After 5 months there, my original job hired me back...which is the best thing ever. Less pay (not by much), but get 3 day weekends every week, 2 mile bike ride from my house, I get off at 4pm, get to bike every day, go drink at happy hour and be happy instead of miserable, and just remain happier overall.

I don't know how people can do long commutes...that's the basic thought of my story. However...as I understand...sometimes it's the only job you can find nowadays. I have lucked out to work somewhere I can remain happy.

steve garro said...

Math is for Dumb People - sheesh! But yes - you are right. I think costs on a white bread but perfectly good to go frame must be getting close to $700. - Garro.

Invisible Hand said...

I think it's a harder problem than your discussion. But I enjoyed it nonetheless.

Present value helps your argument, BTW. That is, the time spent commuting occurs earlier in life than the "time spent" dead due to smoking and is consequently much more valuable considering how much Americans seem to discount the future.

I'd ask the question, "How much would you be willing to pay to extend your life another year?" Taking the 6.5 year estimate and the present value of purchasing smoking products and ignoring any "satisfaction" from smoking, we would have an idea of the cost of smoking. I recall that typically people use something around $100K/year for a healthy year. (for instance ... Cutler and Richardson, Your Money and Your Life, The Value of Life and What Affects It) The two-hour commute costs $40/day + 2 hr/day ... you can monetize those two hours and eventually get something in present value.

Shortening one's commute also tends to cost more. I'm not sure that distance squared fits it well, but I could believe that it is exponential or some other nonlinear relationship controlling for other characteristics.

Walt said...

Great points, IH. I have done a much more complex version of this that also accounts for risks of dying in a car accident, indirect costs due to wear and tear on transportation infrastructure, health problems associated with being sedentary, the fact that the commuting time is stuck right into the most productive/healthy portion of most people's lives, etc, but it is way too long-winded for the blog. I think the argument made here actually understates the case.

My point was really that just *thinking about* this kind of question in a quantitative way can lead you to insights you would not otherwise have and will help inform many decisions, but most people just go with their gut - which often makes the wrong call.

fomenter said...

don't you have any frames to build?

Jorah said...

Walt, what you are describing is called "attribute substitution". Why would I use math when it's probably simple?

It's genetic!

Joshua Stamper said...

Walt,
In response to why people don't use math, I think that this has to do with the age at which schools try to teach math and the methods that are used. There is no way a 16 year old kid is going to be able to apply something in the classroom to their lives. I sucked at math (ok calculus) in school and college, and to be honest I really did not have a lot of applications for it in my life. It wasn't until I went to graduate school that I really started to understand the utility of advanced mathematics, statistics, and economics. You simply cannot fully comprehend a subject until you can explain it mathematically. I also agree about the wasting your life commuting, but that being said I hate living in the city.

Anonymous said...

Over here on the other side of the pond they've just published a study on commuting. Interestingly people with longer commutes earn more:

http://www.statistics.gov.uk/cci/nugget.asp?id=1101

Still study is a bit dodgy as it was done Oct to Dec, which must effect walking / cycling, as the weather will typically be crappy. They need to do a April to June study as well IMO.

Oh and think yourself lucky petrol over here is now £1.36 per litre. As you like maths so much I'll let you convert it ;-)

Ed

Corey said...

When I changed jobs recently I cut my commute in half, to within easy biking distance AND increased my salary $11k a year. I didn't even need math to put that one together.

Walt, how much extra gas do you think I burned with my mountain bike on the roof, just to ride over to Avery's? :D