Parkinson’s Law on Doctors’ income and time

In his 1955 article in The Economist, British historian Cyril Northcote Parkinson noted that

“Work expands so as to fill the time available for its completion”.

The principle has since been observed to apply more generally to all resources, whereby their demand expands to match their supply. This is consistent with the principles of supply and demand, and latent demand (where consumption increases following increases in supply).

Fifty years later American Orthopaedic surgeon Dr Jesse Slade Shantz made the following observations in his article Battling Parkinson’s Law,

“Over 2 years of residency, I have noted that free time has slowly been wrestled from me. As my efficiency increases, daily duties take far less time, but free time still eludes me and the number of tasks I must complete spirals out of control”.

Tasks expand to fill the time allocated to these and inefficiencies manifest. As your income increases it becomes more inefficient by virtue of the greater impact of the highest marginal tax rate. That is, doubling your gross annual income from say $200,000 to $400,000 does not double your net (after-tax) income. I’ll resist the temptation to comment on the inefficiencies of our tax system here.

I have consistently observed my clients’ lifestyles expand to consume increases in their incomes. This happens organically over time, but it can also happen in steep increments in a relatively short space of time when for example a doctor becomes a consultant. Following an extended period of long hours for very little reward, incomes can increase threefold soon after commencing consulting. Yet the combined effects of Parkinson’s Law and income tax deprive them of their anticipated capacity to set aside surplus funds for the future.

The implications of this on Income Protection is that you need to review your level of cover as your income increases. Many consultants are under-insured in this ‘high probability of claiming’ area because they haven’t reviewed their level of cover for two or three years. Remembering that you will pay income tax on your Income Protection benefit payments, you may be significantly exposed.

The issue of time inefficiency is a harder one to solve. Perhaps IKEA founder Ingvar Kamprad had the answer when he suggested dividing your day into ten-minute blocks and sacrificing as few of these as possible on meaningless activity.