In “Measuring the Values for Time,” a new paper that’s been released by the NBER, Ray­mond Palmquist, Daniel Pha­neuf, and Kerry Smith argue, pace Ben Franklin, that time is not money, at least not in the neat way econ­o­mists like to assume.

In stan­dard eco­nomic accounts, leisure (i.e. non-​work) time is described in terms of oppor­tu­nity cost: the value of some chunk of time is simply equal to the money you would have received had you worked during that time. Under this model, you can, should you care to, figure out the mon­e­tary value of an hour with a simple for­mula used by Ian Walker at War­wick University:

V=(W((100-t)/100))/C

(In the equa­tion V is the value of an hour, W is your hourly wage, t is your income tax rate, and C is a coef­fi­cient of cost of living, which is only impor­tant if you want to com­pare people from dif­fer­ent areas.)

But Palmquist, et al. argue that the value of non-​work time is not so simply fig­ured. [Read more]