What is cheap when you are poor and expensive when you are rich?

J

27 Jul 2020

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Kenneth Fong

27 Jul 2020

Marketing Manager at Seedly

Great question!

Source: NBAE via Getty Images

This is Michael Jordan.

Besides Albert Einstein and Jesus. He's probably one of the most recognisable faces on Earth.

According to Forbes, his net worth was US$1.8billion in March 2019. In April 2020, his net worth was a whopping US$2.1billion. Meaning the man in the picture above earned US$300 million over a span of 1 year.

A part-time maid costs something like S$300 for 4 x 3-hour-cleaning sessions (US$216). That's about US$18 (S$25) a visit to clean your house for 1 hour. We're talking about a 4-Room HDB flat here, and that typically has a floor area of about 90 square metres.

To be fair, Michael Jordan wouldn't be living in a 4-Room HDB flat. He'd be living in a 56,000 square-foot (5,203 square metres) mansion like this:

Source: Business Insider

That's his actual mansion by the way. And it's on sale, so you can have it... if you've got US$15 million lying around.

But I digress.

So, if he were to spend 1 hour cleaning his own home. He would've save US$1,040 each time instead of hiring a part-time cleaner. Y'know what? Let's round it up to US$5,000 an hour coz his home probably has all kinds of bells and whistles (like a regulation-sized basketball court) that regular people wouldn't have in their 4-Room HDB flat.

At this point, you're probably going, "Dude, why would he even clean his own home?! Just pay the part-time maid to do it lah!" and you're absolutely right.

Now, let's just ONLY focus on the money.

If Jordan hired someone to clean his home, he would've spent US$5,000. But if he did it himself, he would've spent US$0. I mean, it's just cleaning, right? Why would anyone pay someone do it for them when they can just do it for free?

*looks at every Asian parent ever when their kids suggest hiring a maid to do the chores

Well... the reason here is because we (temporarily suspended disbelief and) ignored opportunity cost. In other words, we were only looking at the money without looking at the context of the situation.

Also, we're forgetting that if Jordan decides to not hire a part-time maid, he'll also lose 1 hour of his time...

"How much is 1 hour of Michael Jordan's time worth again," you ask?

We know that he earned US$300 million over a year. A lot of which is thanks to his endorsements with the likes of Nike (and the Jordan brand) and McDonald's, as well as the skyrocketing value of his NBA team (the Charlotte Hornets which is worth about US$1.5 billion) just to name a few.

But let's ignore all of that and assume that he works a regular 9-to-5. That's US$102,738 or** **S$142,096 an hour.

Even if he's working 365 days a year, 24 hours a day, he'd still be getting US$34,247 or S$47,355 an hour.

Yep.

It doesn't matter how you slice it, he's going to be pulling in more than US$5,000 an hour.

And if we bring this back into the real-world...

If Michael Jordan decided to catch a one-hour movie at GV on a Friday night (that costs S$13.50 or US$10). He would've still walked out of the cinema, US$34,237 richer.

So...

What is cheap when you are poor and expensive when you are rich?