Consider this…Two men live alone on an isolated island. To survive they must undertake a few basic economic activities like water carrying, fishing, cooking and shelter construction and maintenance. The first man is young, strong and educated. In general, he is faster, better, and more productive at everything; he has an absolute advantage in all activities. The second man is old, weak, and uneducated. He has an absolute disadvantage in all economic activities. In some activities the difference between the two is great; in others it is small.
Despite the fact that the younger man has absolute advantage in all activities, it is not in the interest of either of them to work in isolation since they both can benefit from specialization and exchange. If the two men divide the work, then the young man should specialize in tasks at which he is most productive (let’s say fishing), while the older man should concentrate on tasks where his productivity is only a little less than that of the young man (let’s say cooking). Such an arrangement will increase total production for a given amount of labor supplied by both men and it will benefit both of them.
This is not some silly parable but rather an example of a very sophisticated economic theory called the law of comparative advantage. In essence, the law of comparative advantage states that two countries (or really any parties, such as individuals or companies) can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods.
What? Gotta love some economic jargon. Simply put- comparative advantage means focus on what you are comparatively good, skilled, or efficient at and everyone (meaning society) will be better off.
TaskRabbit is a perfect example of the law of comparative advantage in action. We see the theory at play all the time- every time one of our Senders realizes that their time could be better spent at the office or with the kids rather than grocery shopping or doing laundry. Comparative advantage is at play when this person decides to concentrate on tasks where he/she is most productive while outsourcing the tasks where he/she is less so. Thus, resulting in higher productivity for everyone involved.
Perfect example: Why would I (someone with two left thumbs) spend (agonizing) hours assembling an IKEA piece of furniture when my time would be much better (and more efficiently) spent at other activities, like writing a blog post? If I find someone in my community, who is even marginally less productive at furniture assembly than I am (impossible!), then it makes sense to outsource this activity to that person. The both of us will be better off. I will maintain my sanity and (presumably) write a better blog post while my counterpart will be compensated for his craftsmanship and time. Such an arrangement will increase both of our productivity and result in a more efficient, productive and successful community. Oh, the beauty of comparative advantage and TaskRabbit.
You know the old adage, “if you want it done right, you have to do it yourself?” I certainly do. My mom used to say this all the time- when dishes weren’t washed properly or clothes were put away in the wrong drawer. But, according to the law of comparative advantage, this is fundamentally untrue. Even if I am marginally better at doing something, it makes sense to outsource it if my time can be better spent doing something else.
But, unfortunately, this common misconception often gets in the way of the efficient use of delegation and outsourcing. So, the next time you have second thoughts about delegating something on your to-do list, think again! You and society will be better off if you do.