The Value of a Skill

Scott Adams of the Dilbert Blog asks:

If someone offered you $100,000 to take a class for a few weeks, would you do it? I believe most of you would, assuming there is nothing terrible about the class itself.

But if I change the offer to say you have a 30% chance of making $100,000, would you take the class then? You should, if you need the money and you are rational. But ideally you would find a bunch of classes you could take that all have the same odds. If you take every one of the classes that have a 30% chance of giving you $100,000, one class at a time, your odds of eventually getting the $100,000 are good.

He gives some examples of skills that are worth over $100,000, such as learning a foreign language, business writing, hypnosis, and A-B split testing.

But what he doesn’t mention is that a skill is only worth what someone will pay you, not some arbitrary figure like $100,000. This is not even econ 101; it’s common sense.

If Bank of America, a $300 billion dollar company, hires me to split-test their website, yes indeed me knowing split testing is worth $100,000, possible much more. But for my own site? Much less..maybe $50. Again, it comes down to how much someone will pay you (or for the entrepreneur, how much you earn for your efforts).

Rather than learning skills for the sake of skills and hoping that one of them pays off later, find out what skills people want right now and will pay a lot of money for (hint: coding). In the case of learning a foreign language, find out of there are jobs that are paying decent money for translators. Then learn those skills.

But there is a caveat. A skill can also provide indirect value (signaling) that can yield a monetary benefit. Some examples are high-level mathematics & physics and philosophy, skills that don’t have a direct application for making money (unless you’re a teacher, you typically don’t get hired to ‘solve differential equations’), but signal superior analytical ability that can be applied to a technical job (engineering, finance) that does yield a large paycheck. So a good skill is also one that signals above-average analytical ability, such as STEM, and this agrees with the data that STEM majors earn more money than other majors.

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