Entertainment Return on Investment

Merry Christmas to everyone who celebrates that sort of thing! Mike did an excellent Christmas post, so today’s post will only be slightly related to the season.

A funny perspective on entertainment that I’ve discussed with a few friends is the idea of “entertainment time per dollar spent”. The idea behind this being, you’re going to do/buy things for fun in your life (hopefully), and which do you get the biggest bang for your buck from? If you’ll forgive a little math, consider:

Entertainment ROI = Enjoyment * time / cost

Enjoyment is hard to quantify, so I’ll ignore it for this post, but I think it would be fair to factor in the idea that you enjoy something twice as much as something else.

Perhaps a clarifying example is in order. Say I go see a 2 hour movie and I pay $12. My “EROI” is 0.17 (2 hours/$12). You watch an hour of TV each day, and cable costs you $50 / month, your EROI is 0.6 (30 hours / $50). So if someone was trying to save money, and enjoyed both watching TV and seeing movies, they’d probably be better off keeping the cable and stop going to movies for a while (even though cable costs far more then a movie ticket).

I talked about this idea with a friend who is addicted to “World of Warcraft”. He defends it saying it’s his primary entertainment in life, and it offers an incredibly good deal ($13 / month). A “moderate” player probably plays 10 hours / week at least, so this really is a killer deal (3.1 + the cost of the computer and internet access). For someone playing it 40 hours / week, they’re getting an unbelievable deal (but it’ll probably lead to other problems in their life if they’re playing that much).

The extremes are things that you pay for and never use or free things you use often. Say you buy your kid a toy and he never plays with it, the EROI is zero. Alternatively library books can give you hours of enjoyment for free, for a EROI of infinity.

This is one of those ideas that might be worth considering, but it’s probably best not to go overboard with it. The EROI of an evening out with friends is quite low, but it’s a lot more fun than reading a library book at home, so you should still do it. If you find there’s some entertainment you’re doing on a regular basis that has a low EROI compared to other things you enjoy doing equally well (say a gym membership you don’t use, expensive theater tickets you don’t enjoy, a motorcycle, etc), it may be worth cutting out the low EROI activities.

For those who get gifts today, I hope they all have a high EROI!