Location Capital

Traditional forms of capital include money, relationships, and health. There’s another I’ve discovered but never heard mentioned before: location capital.

Location capital is how much experience you have with a physical place on Earth. For example, if you have a lot of New York City capital, you’re the one that knows all the cool restaurants and bars in NYC. Friends ask for recommendations for the perfect spot for their birthday.

Everyone has location capital of some kind. But no one can have all the location capital for every place, so everyone (even Jeff Bezos) needs to decide what places are most important for them to build capital in.

It’s useful to be aware of location capital because it can affect your decisions around where you spend time.

Let’s say you’re alone and deciding whether to eat out at a restaurant you’ve never been to. What’s the cost/benefit? In exchange for money, you get good food and save time & labor (from not cooking/cleaning/grocery shopping).

But that’s not all — because you’re going to a new restaurant, you also build location capital. This is a one-time “boost” you get from going to a new place. On further visits you’ll still get some, but less.

Your decision will ultimately depend on how much you value food, time, labor, money, and location capital.

Location capital can also act as a hedge against risk. If you’re planning a date, preferring a new place will help make sure your time isn’t totally wasted if the date goes poorly.

I wish I was aware of location capital sooner. I used to prefer staying in over eating out in order to save money. But now I realize those decisions came with opportunity cost. And as a result, I’ve built less capital for the cities I’ve previously “lived” in than I’d like.

In general, I think it’s a good policy to always be building capital (mostly the non-monetary kinds). Location capital is an interesting form of it and being aware of it can influence how you live your life.

Any thoughts?