Time and Money
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]
