The Time Value of Experience

Note: I wrote this in mid 2011, when I was still 16 and in my penultimate year of high school. I might re-write it someday, but I feel the idea is important enough to make it worthwhile re-posting the original. The project I mention at the end, “They Don’t Teach You This In School”, was about creating an archive of life lessons and experiences through one minute videos asking people the question, “What’s one thing they didn’t teach you in school that you wish you had known when you were younger?”

You’ve no doubt heard of the Time Value of Money, a theory that explains how the value of a dollar in your pocket today is more than the value of that dollar if you receive it tomorrow. If you own that dollar right now, you have the opportunity to receive interest on it before tomorrow, which means that the dollar is more valuable to you by the amount of the interest that you receive before tomorrow (and tomorrow can represent any date in the future).

The Time Value of Money theory is the basis of fundamental finance and economics. It explains the core reasoning behind why people act rationally with regard to money and how people make investment decisions. There is no arguing with the importance of this theory in our society.

I propose that there is another theory which is arguably more important than the Time Value of Money. It’s a theory that is relatively obvious, but often forgotten. The theory explains the core reasoning behind how we act, and how we make decisions in life. And because it encompasses much more than money, it’s something that people should be made aware of, so that they don’t forget it.

Let’s call it the Time Value of Experience. It describes how experiences we have are more valuable the earlier that we have them, because those experiences can then be applied to all other parts of our lives in the future. It’s about knowledge and lessons that we’ve learned – so perhaps those terms are interchangeable.

If I make a mistake today – let’s say I screw up a negotiation with someone, or make a bad decision – then the lessons that I’ve learned through this experience are valuable, as they help me to avoid making similar mistakes in the future when perhaps the stakes are higher. By making these mistakes today, that experience is more valuable than if I made the mistake tomorrow because I’ve had a day with which to apply that experience to my life. Later that day, I may have avoided making a similar mistake because I already made the mistake earlier that day.

Therefore, experiences that I have today are more valuable than that same experience tomorrow by the difference of mistakes that I would’ve made before tomorrow if I hadn’t gained that experience today.

Obviously, the Time Value of Experience is not as easy to measure as the Time Value of Money. It’s intangible, and non-numerical. But by being aware of this theory, we can attempt to gain as many experiences as we can, as soon as possible.

This theory explains why many entrepreneurs love making mistakes, and look upon mistakes as a huge achievement. By screwing up, you’ve successfully gained experience and knowledge which you can apply to everything you try in the future.

The Time Value of Experience also helps me to explain the importance and value of my project They Don’t Teach You This In School. If people can pass on their knowledge and experiences through TDTYTIS, then young people can learn from that right now and benefit from it into the future. On the other hand, if the only way for someone to learn something is through personal experience, then society is slowed down because everyone is making mistakes that could be avoided.

I believe everyone should bear in mind the Time Value of Experience. You should try do gain as much experience as you can in whatever it is you do every single day, because that experience is more valuable the sooner you gain it.

Valls Calls Down Under: Another World Leader Woos the South Pacific

Which country wouldn’t want to be a Pacific nation these days? It was a sign of the times when Manuel Valls, the French Prime Minister, declared during a visit to New Zealand on May 1st that “I also come as a neighbour, as France is also a nation of the Pacific!” One could almost picture the notes his aides had prepared on the flight over, suggesting, one suspects, that Mr Valls emphasise France’s deep ties and connections to the Asia Pacific. His visit to New Caledonia, Australia and New Zealand comes at a time when many countries are dispatching leaders to the South Pacific to strengthen economic and political ties with friendly countries in the region.

France does indeed have colonial-era ties to the Pacific. New Caledonia, an archipelago roughly 1,000km from Australia’s eastern coast, remains a “special collectivity” of France. France also counts as possessions the islands collectively making up French Polynesia in the central South Pacific, as well as the tiny Wallis and Futuna. Yet this, too, is changing. Part of the reason for Mr Valls’ visit to the Pacific was to discuss with New Caledonia’s leaders details of the islands’ 2018 referendum on independence. As a vote nears, France looks to be seeking continued influence. While in Noumea, Mr Valls announced a $240 million loan to help Societe Le Nickel, a New Caledonian producer that has been struggling with low nickel prices.

But Mr Valls’ need to quite literally exclaim his country’s ties to the Pacific seemed to emphasise the insecurity behind the statement. He is not the first world leader to emphasise the ties. In a speech to the Australian Parliament in 2011, President Obama declared that “Our new focus on this region reflects a fundamental truth—the United States has been, and always will be, a Pacific nation.” As with France, the statement is not untruthful. But the circular logic in proclaiming a “new focus” with reference to a “fundamental truth” of history does show the urgency with which these pivots to the Pacific are being undertaken.

These declarations of Pacific identity may nevertheless help to give the impression of friendliness, which is useful for countries hoping to tap into economic opportunity in the Pacific. Much to Japan and Germany’s dismay, Australia announced on April 26th that it had chosen France to build its new fleet of submarines. The A$50 billion ($38 billion) contract was highly prized, and explains Mr Valls’ last minute addition of Australia to his Pacific tour.

Pacific countries seem to be rather enjoying the flirtation. The French leader’s visit gave John Key, New Zealand’s Prime Minister, an opportunity to make former New Zealand Prime Minister Helen Clark’s case to be United Nations Secretary General, as well as argue for a long sought-after New Zealand-EU trade deal. Mr Valls may also have encountered Pranab Mukherjee, India’s President, on the tarmac in Wellington — Mr Mukherjee was calling on New Zealand’s political and business leaders, the first ever visit to the country by an Indian head of state. He, too, brought the possibility of some large cheques, announcing the agreement of direct flights between the two countries.

In the end, it is deals like that which mean countries are unlikely to pay much attention to the historical or geographic accuracy of claims to Pacific identity. In the world of global trade and security nothing is either true or false, but declaring makes it so. Mr Valls’ over-eager exclamation might have been worth it after all.