Your goal is likely not to maximize your income. For one, you have to take cost of living into account—a $60k/yr job where you spend $10k/yr on housing is better than a $80k/yr (EDIT:$70k/yr, math was off) job where you spend $25k/yr on housing.
For another, the time and stress of the career field has a very big impact on quality-of-life. If you work sixty hour weeks, in order to get to the same kind of place as a forty hour week worker you have to spend money to free up twenty hours per week in high-quality time. That’s a lot of money in cleaners, virtual personal assistants, etc.
As far as “how do I use the concept of comparative advantage to my advantage”, here’s how I’d do it:
Make a list of skills and preferences. It need not be exhaustive—in fact, I’d go for the first few things you can think of. The more obvious of a difference from the typical person, the more likely it is to be your comparative advantage. For instance, suppose you like being alone, do not get bored easily by monotonous work, and do not have any particular attachment to any one place.
Look at career options and ask yourself if that is something that fits your skills and preferences. Over-the-road trucking is a lot more attractive to people who can stand boredom and isolation, and don’t feel a need to settle down in one place. Conversely, it’s less attractive to people who are the opposite way, and so is likely to command a higher wage.
Now that you have a shorter list of things you’re likely to face less competition for or be better at, use any sort of evaluation to pick among the narrower field.
A $60k/yr job where you spend $10k/yr on housing is better than a $80k/yr job where you spend $25k/yr on housing.
You should consider option values, especially early in your career. It’s easier to move from high paying job in Manhattan to a lower paying job in Kansas City than to do the reverse.
Update the choice by replacing income with the total expected value from job income, social networking, and career options available to you, and the point stands.
Probably the cost of housing correlates with other expenses, and also there’s income tax to consider, but on the surface the first job is $50k/yr net, the second job is $55k/yr net, and so it looks like the latter better.
Your goal is likely not to maximize your income. For one, you have to take cost of living into account—a $60k/yr job where you spend $10k/yr on housing is better than a $80k/yr (EDIT:$70k/yr, math was off) job where you spend $25k/yr on housing.
For another, the time and stress of the career field has a very big impact on quality-of-life. If you work sixty hour weeks, in order to get to the same kind of place as a forty hour week worker you have to spend money to free up twenty hours per week in high-quality time. That’s a lot of money in cleaners, virtual personal assistants, etc.
As far as “how do I use the concept of comparative advantage to my advantage”, here’s how I’d do it:
Make a list of skills and preferences. It need not be exhaustive—in fact, I’d go for the first few things you can think of. The more obvious of a difference from the typical person, the more likely it is to be your comparative advantage. For instance, suppose you like being alone, do not get bored easily by monotonous work, and do not have any particular attachment to any one place.
Look at career options and ask yourself if that is something that fits your skills and preferences. Over-the-road trucking is a lot more attractive to people who can stand boredom and isolation, and don’t feel a need to settle down in one place. Conversely, it’s less attractive to people who are the opposite way, and so is likely to command a higher wage.
Now that you have a shorter list of things you’re likely to face less competition for or be better at, use any sort of evaluation to pick among the narrower field.
You should consider option values, especially early in your career. It’s easier to move from high paying job in Manhattan to a lower paying job in Kansas City than to do the reverse.
Update the choice by replacing income with the total expected value from job income, social networking, and career options available to you, and the point stands.
Probably the cost of housing correlates with other expenses, and also there’s income tax to consider, but on the surface the first job is $50k/yr net, the second job is $55k/yr net, and so it looks like the latter better.
whoops, picked the wrong numbers. Thanks