Thursday, September 15, 2016

We are All Millionaires Now

  1. Would you give up all car travel for $250,000? That is, you never get to get into a car ever again. Not to drive, not as a passenger, not to got to work, and no cross-country road trips. For the rest of your life. 
  2. Would you give up all air travel for $250,000? No cross-country visits to see grandma, no spring break in Florida, and no way to backpack across Europe.
  3. Would you give up all TV and movies for $250,000? No superhero movies, no sitcoms, and no soap operas ever again.
  4. Finally, would you give up the Internet for $250,000? Never again during your life would you send an email, check instagram, bid on ebay, view a cat video, or use whatever yet-undreamed-of applications are developed over the next decades. (link)
Some of us would but most would not. These are modern conveniences that did not exist a little over a century ago that most of us enjoy for a cost of a tiny fraction of million dollars. The gap between value and cost has grown enormously. This is largely due to thousands of entrepreneurs profiting from the introduction of thousands of improvements. Each improvement adds value to consumers and competition eventually drives the price of each improvement down to cost. This gap is also why it is so hard to measure changes in real income over time.

3 comments:

  1. The title of this article "We are all millionares now" seems to express the concept of opportunity cost. For a person who gives up air/car travel, TV/movies, and Internet for a total of $1,000,000 cash; that person would do so at the expense of an incurred opportunity cost of a dollar value greater than $1,000,000.

    -Whitt

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  2. This is an interesting topic, while some people would quickly answer "yes, I would give all of that up for $xxx.xx" in reality I believe people would truly struggle. We have been spoiled by these oder day conveniences and when thought is really put into it the descision is tough. No more car travel, this seems easy on a small scale. I could ride my bike to work, but what about visiting family which are a couple hours away, I wouldn't be able to visit them. No air travel, you could drive everywhere, but what if there were a family emergency and you are a 24 hour drive but only a 2 hour flight. Is it worth it then? No TV or Internet, these should be the easiest, but then you are giving up group outings to the moves with friends, pictures of family shared on social media and have all the information in the world available in seconds at your fingertips. When you really think about all of these trade offs, the money no longer seems worth it.

    -Tiffany

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  3. When someone is asked whether or not they would give up something or take the money, most would be quick to respond in saying that they would take the money. If you really stop to think about it though, many people in reality would not take the money. As a society, we are too dependent on technology to give it all up for any amount of money. A million dollars isn’t that much when considering the costs of giving up things that make our lives easier such as transportation and the internet. There is too much risk to give up items that we rely on day in and day out. You have to ask yourself, if a million dollars is worth not being able to ever access the internet or ride in a car again. If you were to ask someone 50 years ago if they would take the money, I think more people would be apt to accepting the money because back then there wasn’t as many conveniences as there is today. Today we have an abundant number of entrepreneurs and those that have the drive to make peoples’ lives easier. More and more conveniences are created each day. It can be as simple as a new app on our smart phones. These entrepreneurs are making money while we are choosing simple conveniences rather than money.

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