Just run the numbers

One thing I’ve learned from the LessWrong/CFAR/SlateStarCodex rationalist crowd is the power of sketching something out with rough numbers. Indeed, there is a whole blog called Put A Number On It! in this space.

I’ve recently felt a divide appear between myself and my friends relating to increased ability with strategic thinking and increased future timelines, and I think sketching out rough numbers when making decisions has helped to precipitate this.

An example is my partner wants to switch career. He achieved a temporary job in an office, doing something other than what he normally does in offices. This is providing him short-term relief from his crap old job. But his real short-to-medium term goal is to labour on building sites for slightly more money. The office job is full-time under the normal tax system, which means higher taxes and lower pay but paid holidays and sickness days. While the labouring job would be self-employed, meaning higher paid and lower taxes but unpaid sickness or holiday and potential gaps in work contracts.

One day he told me that the labouring job would pay less per day than we initially thought, but had the “potential” to increase to the amount that we assumed initially.

I immediately grabbed a scrap of paper and ran some numbers.

  • yearly salary in office job – minus nothing for 4 weeks holiday and 1 week sick. Calculate total.
  • potential yearly salary on labouring job minus 4 weeks holiday and 1 week sick. Calculate total.

The difference between taxes is harder to do in a simple way so I decided that any reduction in tax when labouring would probably be offset by the loss created by a gap between contracts, where you’re off work but don’t want to be.

I  did quick check of how many working days there are per year (220) to get the daily rate into a yearly one. I then decided to check on a local job website for the yearly salary of an inexperienced office worker vs. an office worker in the same job with more experience – because we needed to check the “potential” figures as well for that job and we already knew the “beginner” and “experienced” numbers for the labouring job.

I then ran the same calculations as above.

The whole process took precisely 4 minutes with a pen and paper and one internet search.

The numbers came out very strongly in favour of the office job, both now and in the “potential” future. Which was a surprise.

This little exploration of the options available quickly using easy numbers that were already known was an automatic reflex on my part, it showed a very stark difference between the two options, and covered a time span of 1-6 years. It was incredibly simple and incredible clarifying.

And did not occur to my partner in the slightest.

In the rationalisty space, there are of course more complex extensions of this method that can involve probabilities, ratios, or deducing an unknown number from known ones (e.g. how much would I have to earn/save to make this plan viable?) however just the basic write-it-all-down premise is extremely powerful on its own.

So, this is short post to remind / tell everyone: put a number on it!

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