Human Capital

Despite stories we like to tell ourselves, and mental tricks that make perceiving ourselves a “per se” entity,  disconnectable from the life game we are playing in, we are actually all acting and leaving within economies.

In modern technical financial analysis we are all represented as human capital; we are just “special” assets with peculiar traits.

Those people able to win the sense of disgusting and detaching from it, can actually see the world from the right perspective, no matter how sad (or “immoral” as someone says) this could appear.

Once you learn to give an economic value to people creativity, competences, knowledge etc… you start perceiving the life same way as those who decide for you do.

If you want to make another step forward, now think that (surprise surprise) even people life can be given an economic value. That is what happens every single day anywhere in the world.

This probably commenced thousands years ago, but do not know way we tend to struggle accepting this.

Analysis of human capital is not a piece of cake. You must be able to aggregate and balance things that seems quite far from numbers.

But if you could count human capital of your citizens as part of the GDP, wouldn’t it be great? Correlating human assets to stock prices? Sure. What? Am I a going to far? Too fast?

[Oh what a huge bubble you could make explode afterwards, just a personal note here]

Ok that’s just a blog post supposed to be light and readable. But I need you to think about it.

Human capital now flows in (and out) a company as well. You, as an employee or as a consultant are part of it.

You count for way more that what your cost is, and precisely for the reasons summarized above.

You can help creating the bubble I mentioned in brackets. How can I emphasize the real value of human capital? Just work on the “creativity/innovation” measure.

This is why everyone is trying to define themselves as innovative companies, even hiring innovation managers (a company where an “innovation manager” position exists has to be innovative, come on)

The human capital in a young and agile start up founded by 4 young developers in colorful t-shirts, oh…it sounds much much higher than a comparable 4 people small shop selling bread and pastries, do not you agree?

And a country with a 39 years old premier familiar with twitter and social networks?

Yes, it’s human capital is higher that the old bald guys we have been used to. And it appears a fantastic “anchor” for other to estimate a higher human capital country as a whole.

Stephen Amidon novel book (here http://www.amazon.it/Human-Capital-Stephen-Amidon-ebook/dp/B002ZJSV8C/ref=sr_1_1?ie=UTF8&qid=1408540703&sr=8-1&keywords=human+capital) or a recent (and decent) movie in Italian (http://www.mymovies.it/film/2014/ilcapitaleumano/ ) are interesting but focus on touching other feelings chord.

They are interesting anyway to focus on another aspect: life expectancy, which is fundamental for human capital measurement.

As I am approaching to be 40 years old, my life expectancy is something I start seriously thinking about.

Should I keep renting a flat or loaning money from the bank and buy a house? Should I stay in Italy or should I consider other options? For how long will I be able to drive 80 thousands km per year, catching planes and airplanes running around for visiting customers?

Every question can find an answer from economic measurement and perspective. You need to find out all correlations and maximize them. Probability curves differs from country to country, from town to town, all regressions, correlations are so difficult that if you manage to solve this you might get a nobel prize. But think about it.

In order to better explain what I mean, just play with this (supposed to be?) serious website: http://www.facemyage.com/

That’s my result:

 Untitled

Apparently, I look 3 years younger , but I will leave much less than my grandmothers did, not to mention my great-great-grandmother, who spent in this world more than a century. I have got less than 50% probablity to survive to 85.

Insurance giants are collecting data like that from social networks in any case: they are trying to know about you more that you do.

Solutions? Well, I do not think quitting your digital life is possible. So maybe it’s time you start knowing yourself better than others do.

For sure it will be interesting, trust me.

P.S.

If you feel not comfortable in letting a web site calculating your life span from your face, just remember the wise Snoopy’s quote: “How to look younger? Don’t be born too soon”

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