Human Capital

Human Capital
Author: Manas Das
When an economist refers capital it get related to investment and production of better value of service in the future. On the other hand accountants say capital is an expenditure whose expense is carried out over its useful life may be for several years.

There are two types of capital i.e. tangible and tangible. Tangible capital can be considered to buildings, equipments and merchandise. If a firm invests funds to purchase some equipment, it is expected that this equipment will provide a useful life to its owners over several years. On the other hand intangible capital is something that can provide a long-term value, but it is something that is not physical in nature. Common examples of intangible capital are copyrights, licenses, patents, and trademarks to name a few. Most important yet, often-overlooked intangible capital is human capital.

Human capital in simple is the investment of time, energy and other resources to develop one's abilities, skills and knowledge. Going to college, learning a trade, reading a book, exercising are all examples of building human capital. Although it is not certain when and if these investments of time, energy and money will ever pay off, the possibility of a future payoff such as a higher paying job, better health, added ability to satisfy one's wants and needs, better relationships, etc would classify these activities as those building human capital.

In the hustle and bustle of our busy lives we often overlook the importance of building human capital. We will spend the time to maintain and upgrade our houses and cars, but we forget about the most important capital of all us. We must all take the time to build and maintain our own human capital. My undergraduate professor once mentioned in class emptying ones pocket book to develop knowledge is something that can never be taken away from you. Knowledge is a valuable human capital that should not be taken lightly and can have a profound affect on the quality of ones life. It is essential that we all strive to better ourselves, not only by building knowledge and skills, but also by improving ones health and physical capabilities, as well as relationships around us. The more capable, productive and better connected we are, the greater the rewards for ourselves as well as for the society as a whole.