The amount of money that you earn in life depends on managing your opportunity costs. In principle, this is somewhat simple: Focus your time where returns are the greatest.
Choosing a medical specialty is difficult for many students, since there are numerous factors that come into play.
First you’ll need to evaluate your commitments: How long is the residency? How much time do I have to work each week? What’s the call schedule like?
It’s also important to try and get an idea of your returns for completing residency: What’s the average salary? How much vacation time do I get? Are there bonuses for patient, case, or specimen volume?
Let’s step out of the residency realm for a bit. Did you know that you could earn $1 Million by not watching TV?
A recent study found that it would take $1 million for someone to be willing to give up TV for the rest of their lives. People rarely consider the cost of watching TV, and when they do, they usually focus on the cost of their monthly cable bill. The truth is that there are a wide variety of costs associated directly and indirectly with having a TV.
The costs associated with watching TV go far beyond the cost of the television and cable. Additions such as pay-per-view, DVD players, gaming consoles, entertainment cabinets, movie rentals, and games help to run up the bill.
More importantly are the opportunity costs associated with not watching TV and the hidden costs of commercials.
Another cost often overlooked when considering the price of watching TV is the opportunities forfeited when you choose viewing over something else. Assuming that your time is worth at least the minimum wage of $5.85 per hour, your opportunity cost is $737 a month if you view the average amount of TV.
In 2005, Nielsen Media Research reported that the average person watched approximately 4.5 hours of TV a day, or 31.5 hours a week. At $200 in extra spending for each hour watched, that means that the average person spends an extra $6,300 a year due to TV commercials that they wouldn’t have spent if they didn’t watch TV.
You Need To Measure The Opportunity Costs For Medical Training
This case study on TV looks at costs many people have never thought of. You need to take the same approach when selecting a specialty in medicine.
It basically boils down to this: Where can you make the most amount of money with equal time and monetary commitments?
Here are some things to consider:
- Are increased costs associated with a “prestigious” residency or medical school worth it in the long run?
- Will you dilute your time value of money with more hours worked on the job?
- If you plan to go into private practice, is it really necessary to train at an academic center?
- Could you do something now that surpasses your future earning potential as a physician?
- Is a 5-year residency financially sound when you could potentially match those earnings in a three or four year specialty?
Lifestyle specialties are so popular because either the commitments, returns, or both are favorable. Similarly, the opportunity cost of not choosing a lifestyle specialty is extremely high.
Honestly, why work 60 hour weeks for $120,000 per year if you can work the same amount of time and pull in $300,000?
It’s something to think about.