WARWICK, England (CNN) -- A mathematical formula calculated by a British university professor has found that time actually is money.
According to the equation, the average British minute is worth just over 10 pence (15 [American] cents) to men and eight pence (12 [American] cents) to women.
'Time is Money, Professor Proves', CNN.com, May 29, 2002
Two people, Alice and Bob, do the same work. They can each choose how many hours of their time they spend on it, and are both equally productive. Bob and Alice are, in every meaningful sense, identical. Except, Bob is a volunteer, and Alice is paid $12 an hour.1
Bob and Alice take the afternoon off to go and see The Passion of the Christ, spending 127 minutes of their life in a way that will never be productive or useful. What has this time cost each of them?
This is very simple to figure out. The opportunity cost of time not spend productively is the money they could have earnt by working. If we ignore the cost of the ticket, eating at the most expensive place in town, and the time and cost of getting there and back, we can simply express the cost of the movie as:
Opportunity Cost of Leisure = Income per unit of time × Time spent
Cost to Alice (CA)
$12 × (127/60) = $25.40
Cost to Bob (CB)
$0 × (127/60) = $0
Since spending his time unproductively costs Bob no loss of income, his time has a value of $0.
I am a student. I have a casual job that pays minimum wage. I also receive a meagre income from the Government, like many Australian students. Oh, wait. I had a job last week. Note to self: don't swear at your boss. So, now that I have no wage-based income, is my time suddenly worthless?
Of course not. Now it justs costs me nothing to do my homework.
Repeat after me:
I will not allow my worth to be calculated in dollars.
Just because I have no wage-based income, that doesn't mean it's not worthwhile for me to spend time with my girlfriend. It's also worthwhile for me to spend an evening having dinner with my mother. It's worthwhile for me to visit my grandparents and ask them questions. It's even worthwhile sitting down with a cup of coffee and doing the crossword. And it doesn't mean that going and seeing a good movie isn't productive2.
Node your homework
1 Update, February 2010: this article linked in gate's daylog of February 18, 2010 is interestingly relevant to paid work vs volunteer work, and what people consider their time worth.
2 Alice and Bob, however, have still wasted 127 minutes of their life that they will never get back.