fredclaymeyer

Time as a universal currency

In Posts on April 6, 2011 at 1:17 am

I’m writing a research paper about measuring social value. It’s extremely tricky, in part because many kinds of social value are outside economic exchange: measuring the financial value of a program to plant trees in poor urban neighborhoods might capture only the rise in property values—by no means the main thrust of the program.

To help solve this problem, I suggest measuring social value using time, not money, as the basic unit of analysis. Every activity competes for our time, so the “time market” extends into even non-economic activities: we can measure people’s valuation of, for example, free education or public parks by the amount of time they’re willing to commit to attending, enjoying, or defending their access to those resources. Moreover, “time wealth,” unlike financial wealth, is roughly evenly distributed: a day is precisely the same length for all people, and even average life expectancy at birth varies by a factor of no more than 1.7 worldwide. And we can even transform financial statistics into time statistics, simply by dividing by the relevant wage rate. (So the actual cost of a $5 bottle of medicine is either 15 minutes at a wage rate of $20 per hour—or 8 hours at $5 per day.)

I’m really excited about this approach to measuring value, and it’s even paid dividends as I work to understand my own life. But I can’t imagine it’s entirely novel, and the concept of “opportunity cost” seems quite close to parts of it. Suggestions welcome!

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  1. Matt Ridley, in The Rational Optimist, makes a number of points about progress using time as the currency. For example, he claims that an hour of work today earns a person 300 days worth of reading light; in 1800 it earned you ten minutes. He goes on:

    This is what prosperity is: the increase in the amount of goods or services you can earn with the same amount of work. As late as the mid-1800s, a stagecoach journey from Paris to Bordeaux cost the equivalent of a clerk’s monthly wages; today the journey costs a day or so and is fifty times as fast. A half-gallon of milk cost the average American ten minutes of work in 1970, but only seven minutes in 1997. A three-minute phone call from New York to Los Angeles cost ninety hours of work at the average wage in 1910; today it costs less than two minutes. A kilowatt-hour of electricity cost an hour of work in 1900 and five minutes today. In the 1950s it took thirty minutes work to earn the price of a McDonald’s cheeseburger; today it takes three minutes.

    That isn’t quite your point, but it poses a question I think might confound a time-based theory of valuation. Chiefly, does the fact that people spent more time working to pay for necessities of survival in the past (or in poorer places) mean that they valued survival more than we do today (in the rich world)? Would we, rather than seek constant gains in the nominal monetary valuations, seek to restrain efficiencies to diminish value depreciation?

    Said another way, we optimize what we measure. Is time the best value to be optimizing? Surely it’s different than money, and in some ways better, but is it good?

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