23 Jun Personal Worth
[Note from the author: This post was originally published in 2012 on a blog entitled “Further to Freedom.” This blog was an attempt of mine to communicate some of the complexities of economics in an accessible, easy-to-understand way. The blog was organized by ‘Levels’, which I thought would help readers to select articles which better corresponded to their level of economic understanding. I had originally envisioned this as a collaborative project and wanted to bring in a handful of others to contribute articles. That vision never materialized, but the time I committed writing and working on the project gave me a deeper understanding of the topics, and I’m still happy to share the work. This particular article was categorized ‘Level 2’.]
You hold a dollar in your hand—a single dollar. As you fold it over you think about about the time you worked on the job today. As a roofer, everyday you expend large quantities of personal resources like time, energy, and skills. These are all resources that you already have in your possession, resources that, if you choose, could be spent on yourself and your own homestead. Instead of laying other peoples’ roofs, you could spend your time and energy building your own house, cultivating your own garden, raising your own livestock. But you know that by investing your resources–time, energy, and skills–in the market, you will receive a larger return on investment. You will ‘get more’ out of your present resources if you invest them in the market. So you go to work every morning, nailing shingles to roofs across town. In return, customers pay you dollars that you can in turn buy products with—products that you probably would not have afforded had you not invested your resources.
A feature of personal value that folks often overlook is their human capital, or ‘non-money worth.’ Human capital is the value that one carries around with them throughout the day, one’s ability to think and to work. This capital has real value attached to it because the market desires skills and labour. Your human capital is in many ways tied to the market’s need for those particular skills or attributes that you have.
This is the reason many individuals attend colleges and receive degrees–it contributes to their human capital. Students invest their time and energy into schooling that will add worth to their skill set. Their developed skill set can then be invested into the market and the student will receive a higher ‘rate of return’ than if he or she had not attended college.
It is easy to see that worth runs deeper than the number of ‘$’ signs in an individual’s bank account. Worth can be measured in aptitude, skill, livestock, property, or money.
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