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Know Whether to Delegate

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Know Whether to Delegate

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You shouldn’t necessarily do things that you’re good at. In economics, this idea is known as comparative advantage. Delegating may free up your time to do something more profitable. It might be to a country’s advantage to import something that they could produce cheaper domestically. Importing one thing might free up resources to export another thing that’s more valuable.

Comparative advantage is often illustrated by a hypothetical lawyer and an assistant. A lawyer who can type very quickly is still better off hiring someone else to do the typing because he can make much more per hour practicing law. If he could type twice as fast as an assistant, and he could earn more than twice as much practicing law as it costs to hire an assistant, he makes money by delegating.

This illustration makes sense at one level, but it also sounds a little quaint. In fact lawyers do quite a bit of typing. That’s explained by another economic idea: transaction costs. It costs time to recruit and hire an assistant. And once you have an assistant, it takes time to explain what you want done, time to wait for the work to come back, time to review the work, etc.

Highly paid executives type their own emails, at least some of the time, because it’s not worth the transaction costs to have someone else do it. But for a larger task, say typing up hundreds of handwritten pages, it’s worth paying the transaction costs to get someone else to do the typing.

Most advice on delegation is simplistic. It ignores transaction costs, and has a naive view of opportunity costs. It says that if you make $50 an hour, you should delegate anything you can hire done for $40 an hour since the opportunity cost of doing the $40 an hour task rather than delegating it is $10 an hour. But things are more subtle than that.

Opportunity costs only apply if you’re turning down an opportunity. If you stop doing $50 an hour work to do $40 an hour work, then you’re losing $10 an hour compared to what you could earn (ignoring the transaction costs of delegating). But if you don’t have $50 an hour work to do, if you’re otherwise idle, then delegating $40 an hour work is costing you $40 an hour, not saving you $10 per hour.

People are not machines. If you have an idle machine, give it work to do. And if two machines could do the same work, use the one that can do the work the cheapest. But people are more complicated. We like some kinds of work better than others, we learn, and we need time to rest.

Suppose you enjoy doing work that you could delegate for $40 an hour. You find it refreshing. There’s no opportunity cost in doing it yourself if the time to do it comes out of time you would have spent on a hobby.

Suppose you don’t enjoy doing work that you could delegate, but there’s something you could learn from doing it. In that case, there may be an opportunity benefit as well as an opportunity cost: learning something new may create opportunities in the future.

The previous two paragraphs account for enjoyment and learning, but not rest. If you don’t have $50 an hour work to do, doing $40 an hour work is only one alternative. Another alternative is to do nothing, which is very valuable in ways that are hard to quantify. And even work you enjoy may take energy away from other work.

Managing energy is more important than managing time. Energy is what gets things done, and time is only a crude surrogate for energy. Instead of only looking at what you could earn per hour versus what you could hire someone else for per hour, consider the energy it would take you to do something versus the energy it would free to delegate it.

If something saps your energy and puts you in a bad mood, delegate it even if you have to pay someone more to do it than it would cost you do to yourself. And if something gives you energy, maybe you should do it yourself even if someone else could do it cheaper.

Finally, note that energy isn’t the same as pleasure, though they often go hand in hand. Some activities are enjoyable but draining, and some are not enjoyable but invigorating. For example, I enjoy teaching, but it takes a lot out of me. And most people don’t enjoy exercise that much even though it gives them energy.

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