True Cost of Beer

Put a money value on time, and the cost of a can of beer looks academic

Date: April 19 2008
by Marcus Padley

The average wage in Australia for a full-time working adult was $64,844 a year, at last count. That is $1247 a week, about $31 an hour or 52c a minute.

That is earnings. But when it comes to spending, you have the Australian Tax Office in the middle. It will take $14,803. Now you are earning $24 an hour or 40c a minute.

In finance we constantly talk about the time value of money. But in life we now have the basis for calculating the money value of time. A minute is worth 40c in cash and 52c in earning capacity. Brushing your teeth (three minutes) costs the average man $1.20 in cash and $1.56 in lost earning capacity.

More seriously, a can of VB appears to cost $1.66. But under the money value of time formula, a can of VB costs you 4.15 minutes of your life, and if you take more than 4.15 minutes to drink it the cost doubles. So drink fast. Take this a bit further and a slab of VB costs you 1 hour 40 minutes of life. On top of that if you go to a bachelors' and spinsters' ball and drink the whole slab it will cost you another 24 hours of lost earning capacity.

Put like that, a single can of VB can, if drunk in the company of 23 of its closest mates, will cost you 4.15 minutes plus one hour of incapacitation. That is 64.15 minutes of life lost per can. Or put another way, $1.66 plus $24 in money value of time; $25.66 a can. If you earn more than the average wage then VB becomes more expensive. For someone on $100,000 a year, a minute of life is worth 58c cash; on $150,000 it is 82c, and for someone earning $200,000 a minute of life is worth $1.04. Of course earning $200,000 is great, but it does mean you only have 1.6 minutes to drink a VB before the price doubles, and if you go to a B&S ball the price of VB escalates to a heady $64.06 a can.


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