Last week I signed up for an online education program known as “Masterclass.” They launched a short promotion offering a 1-year subscription for $1 for all college students (normally it costs $180 for full access). They offer courses on a variety of topics, but I am primarily interested in their classes on filmmaking and storytelling. Clearly, I have downward-sloping demand, as I do not value the courses at $180/yr, but I do at $1/yr.
If I was rational, I would purchase it when my E[MB] > MC. I am only willing to pay up to ~ $50, which implies that my E[MB] is ~ $50. The courses are several hours each. If my E[MB] is less than $50, and I spend ~20 hours on Masterclass this year, that implies that I value that time at $2.50 an hour. Great! My E[MB] > MC, but this is slightly concerning. If I chose to spend my time on Masterclass, does that really mean the opportunity cost of my time is only $2.50 an hour??
Not exactly. I could probably find work somewhere to earn more than $2.50/hr, but I value the classes at: E[MB] + UTILITY (i.e. enjoyment & investment in my human capital). Just like we learned about voting, I do not merely consume Masterclass for because its E[MB] > MC. That would suggest I have desperately low opportunity cost of my time. I also derive utility from Masterclass, and since I am now writing about it in a blog post, it seems I’m also getting some expressive value from my consumption! Like voting, the E[MB] alone doesn’t fully explain my consumption, I also factor in utility and expression.
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