Inflation aside, money earned in early years is worth more than in later years, due to growth potential as an investment. Put another way, a $10 hourly wage is worth more when you’re 18, than it is when you’re 40. Buying power, at the time, may be low, but it can become significant after years of compounding as an investment. Assuming you can return a modest 5%, annually, $10 becomes $70 dollars in 40 years:
While this is easy to map out in the financial sense, the same is true for many compounding decisions. To flip the concept from earnings to value, if we increased productivity at the same rate, our work should be 3x more valuable in 23 years. Raw productivity should increase at a greater rate, but competition will diminish the impact of of our gains.
Both perspectives help to explain the incredible power and risk of early education. The power comes from an early boost that we can then compound into shocking levels of productivity and financial security. The risk comes from recklessly spending youthful vitality and capital, worse when we use loans, leaving us victims of the same compounding.