Ye Olde Swimming Hole

current, insightful, yet nostalgic

Saturday, February 18, 2006

What is the Time Value of Knowledge?

The foundation principle of finance is the time value of money. Simply stated, money today is worth more than money in the future. Once you understand that principle, you can begin to understand how to maximize your profits and eventually grow wealthy.

The same principle must apply to knowledge. Knowledge gained today is worth more than knowledge gained in the future. Just has money gains interest that is continually compounded, knowledge also compounds at a rapid rate.

This is a principle I have pondered for some time, but consumer-generated media adds a whole new dimension and this principle may give us some indication of the reason why blogs are so popular. Knowing something early is usually better (unless "we can't handle the truth.") Now information travels at a break neck pace. So what does that say about how new media will affect our economy. I think it will bring greater prosperity as well as obviously bringing more progress.

It would be interesting for someone to try to quantity just exactly what the time value of knowledge is.

I blogged about this on another blog over a year ago (in fact I created it specifically to record and stake my claim to this concept) and at the time I did a Google search to see if this concept had appeared anywhere else on the Web. I found several academic references to it, but since then, this software consulting site has popped up and is also using the concept.


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