Nested in this NYTimes article about the principles behind the Geek Squad computer repair service is a passage about how much people value their time:
Economists say industrialized societies are spending less on the basics of life — food, clothing and shelter — and more on leisure pursuits. Indeed, Robert Fogel, the Nobel-winning economics professor from the University of Chicago, has gone so far as to predict that by 2040 it will take the average American household only 300 hours of work a year to supply its basic needs.
As leisure time becomes more valued, Americans are loath to give it up. We spend money to get more of it. How much we are willing to spend depends on what we make as well as a more intuitive process of how we measure what our leisure time is worth.
The results from two online calculators that determine what your time is worth may surprise you. Try this or this. First, your hourly rate may be lower than you think. For instance, someone making $70,000 a year, but who puts in 50 hours a week and commutes an hour each way, may discover the hourly rate is not $33, but about half that.
So does that mean you hire a handyman only when he costs less than $16 an hour? It’s more complicated than that. With only about 12 hours of true leisure time a day, each precious hour is bought with more than 5 hours of work. According to the calculator, each hour of spare time would then be worth about $85.
How an economist measures the value of leisure time is inexact because do-it-yourselfers sometimes have a stronger motivation than saving money. They enjoy the process. Because seeking joy is less understood than seeking money, economists are still struggling to decide whether growing tomatoes or making drapes is rational.
My boss once told me that the first time in his life that he really felt he’d made it was when he looked out his window and saw some Mexicans mowing his lawn. I now pay a local lawn care company $35/week to take care of my grass. On the other hand, I assembled a dresser and two nightstands from Bo Concepts because I foolishly was too cheap to pay for delivery and assembly. The lost evenings and the frustration of the incomplete instructions more than offset the money I would have saved. But that’s hedonics for you.
I was a lot smarter when we bought our new buffet from Crate & Barrel last week, scheduling assembly/delivery for a Saturday. The Salvadoran delivery guys showed up early (8:45 for a 9-noon window) and were out the door in a few minutes.
Today, Amy’s planting tomatoes. Maybe I can pay someone $25/hour to have witticisms for me, so I can watch more basketball and keep this site up to date.
2 Replies to “Time is Money”