How much time is money?
Many decisions we make concern time or money. Both are scarce resources, but the relationship between them can be unexpected
My first summer job was as an attendant in a petrol station and car wash facility. The six weeks I spent refuelling vehicles and/or ensuring they made it safely through the car wash tunnel was a lucrative, as well as educative period. Admittedly, some of what I learned was trivial and turned out to be of little use later in life. I once spent five minutes, with the nozzle in my hand, circling an old Fiat 500, looking for the filler flap, only then to be told by the owner (who was chatting with my boss) that the tank is underneath the bonnet (which is in fact the boot lid, as the engine is in the rear — but I digress). Other knowledge was more useful: I learned that a rubber boot is scant protection against the weight of a VW Porsche as mechanism drags it forward, agonizingly slowly, over your injudiciously placed foot, while you try to keep a brave face as you wipe the remaining water droplets from its windscreen.
But the most important lesson was that time is money. I gave up my free time during the Summer school break, but in return I got an hourly wage of 67 BEF (about 7 euros, £6, or nearly $8 in today’s money) plus a share of the generous tips. That money more than compensated me for the time I would otherwise just be spending lazing about.
Time = money, or time > money?
When it concerns work, the monetary equivalent value of our own time is easily approximated by the money we get paid for it. Even if we’d really need to bring into the calculation the (unpaid) time we spend getting to our work and back, the transport cost and whatnot, we are in the right ballpark.
But how would we evaluate someone else’s money and time? This question arises when we consider people’s charitable contributions. Do we think it is better for people to volunteer their time for a good cause, or to donate money? When we only consider the material effect, and all we are concerned with is how effective people’s contribution is, it is easy to work out. If someone can earn more in an hour by doing their job, than it would cost the charity to pay someone to do the work for which they are volunteering, then they should give cash, not time.
However, effective altruism is not the only thing that matters. Most people (including many who pretend otherwise), care about something else than just how much benefit they can bestow on the charity. Very few people make 100% anonymous donations (i.e. tell absolutely nobody about it). A study by Nichola Raihani, a psychologist at University College London, found that less than 5% of donations made to 110 fundraising appeals made via an online platform were anonymous. An earlier study estimated it the proportion at less than 2%. How come? We care about our reputation, so we like signalling to others how generous we are.
The question is, what sends the strongest signal: giving time, or giving money? Sam Johnson, a cognitive psychologist at the University of Bath, and one of the speakers at a recent conference on Cognitive Economics, and his colleague Seo Young Park investigated how people perceive the generosity of others. They asked participants to compare the ‘moral praiseworthiness’ of hypothetical pairs of individuals who either donated money, or volunteered for a certain period for a charity (e.g. building houses in a developing country, working in a hospital, or helping with flood rescue). With one person in the pair making a cash donation equivalent in value to a week’s wages, and the other spending a week volunteering, 77% of the participants thought the individual donating their time was more praiseworthy. In a follow-up experiment, participants rated a donor more praiseworthy for donating their time, even if they believed that this was less effective than donating money.
So it seems we think that time is actually worth more than money, and we do so from two opposite viewpoints. We value it more highly than the equivalent money that would be earned, and we value it more highly than what could be purchased with the equivalent amount of money.
This made me think of a remarkable experiment that the Estonian police has been conducting. Drivers caught speeding (and who were first time offenders) were given a choice between a fine and a time penalty. Those exceeding the limit by 20 km/h or less could opt to wait for 45 minutes at the roadside, and those who drove even faster than that would need to wait for an hour if they preferred the timeout over the normal fine.
One of the motives behind the experiment was that, by keeping drivers waiting during this time, police officers had a unique opportunity to find out more about the psychology behind speeding. But it also provides several more interesting insights.
A first one is the perceived equivalence between time and money. Reportedly, one driver escaped a 400 euro (£340, $440) fine, which is more than what an average Estonian earns in a week. But of 11 drivers who were given the choice, only six chose the timeout, while five still decided to pay up. This suggests people value their time very highly indeed — even a lower fine would still be a large multiple of the typical hourly wage.
The second insight is that the time penalty counters the idea that a fine is a price, a finding from a classic behavioural science study. Parents who were made to pay a fine when they picked up their children late from a day centre treated it as simply the price for extra childcare (I wrote about it here). Rational speeders may simply calculate that the overall cost of the speeding fines they accumulate over a period of time is a small price to pay for (supposedly) getting to their destination more quickly. Taking away the very benefit of their speeding totally reframes the intervention.
Furthermore, the effect of the time penalty is immediate — a perfect example of the ‘T’ in the Behavioural Insight Team’s EAST model for behavioural change: make it Timely. Seeing that the money for the fine has left your bank account days later feels much less connected to your transgression than being held by the roadside, just moments after being caught.
Nearby Finland has adopted the related concept of the Day Fine: transgressors are fined the equivalent of between half a day’s and 60 days’ income. The motive here is more one of social justice (for richer people, fixed fines are much more affordable). But reframing the fine as one in which the penalty becomes the number of days ‘wasted’ to pay the fine might likewise change the perception of the speeder. The same, by the way, might apply for charitable people who want more kudos without actually having to volunteer their time. They can frame their cash donation as the amount of time they have had to work for that money.
So it seems that the equivalence between time and money is not as simple as the old adage has it. Time can be much more than money. And exploring this inequality can reveal opportunities for influencing our own behaviour (and that of others).
Just one final thought: writing this piece has made me appreciate the few minutes of your time reading it even more. Thank you for your attention, and for your time!
Originally published at http://koenfucius.wordpress.com on November 15, 2019.
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