Perhaps we all know the drill and have in some point of our lives bumped to the fundamental equation in life that states:
T = $where T indicated the time and $ the money. The equation states that time is money.
But do we have any proof at all that the equation would be true? Does time really equal money?
First we have to define that was is time for us. You physicists out there might define time as some kind of an indefinite continued progress of existence and events that occur in apparently irreversible succession from the past through the present to the future. But since most of us are just immortals, we can just define time as the most valuable asset that we possess.
Time is money means that because of the importance and scarcity of time in our lives, it is better to do things quickly in order to save the time. The more efficient you are with your things, the more time you have to do other things in your life. The less time you use for your career, the more time you have for your family and friends, for instance.
Let's start by defining what is money. Money is a matter that has 3 functions: Medium of exchange, a unit of account and a store of value. Time is money as where the dollar bill is: I can exchange my time to move your lawn if you exchange yours for doing my homework, the value of an item (or consumer good) can be valued in the basis of its age and you can for example exchange your holiday salaries to days off from work. You can also exchange your time-consuming activities to create more time for yourself. Because time can be used in the 3 functions of money, time is money.
Also time can be used to express a cost. Let's think about opportunity cost, which is the value of the choice of a best alternative cost while making an economic decision. For example, the opportunity cost of sitting in a lecture is the free-time you would have otherwise spent in some other way. Because time can be used the determine costs and value, time is money.
For more proof we are going to use the theory of utility. Utility is a measure of preference of one good over another and it measures the satisfaction gained by consuming a good. One quality of utility is the law of diminishing marginal utility, which means that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product. Marginal utility is derived as the change in utility as an additional unit is consumed.
For example, you might enjoy to grab a pint with your friends in the local pub at a Saturday-night. The more beer you drink, the less you are enjoying it, believe me. You might like getting a bit tipsy at first, but by consuming more and more additional beers, you might start to feel sick and even pass out into a ditch. You might define your personal value, the utility, of one beer at the start of the night to be worth 5€ for you. But when you consume more and don't enjoy it so much, the worth of the one beer for you starts decreasing and could be only 1€ at some point! Normally you would stop the consumption where the your personal utility would equal the cost of the beer.
But what utility has to do with the definition of time as money? The proof comes from the consumption of government-provided health-care. In a government-provided health-care, the consumers have no reason to consider the costs of consuming additional units of health-care since they are free of charge. They would keep on continue to consumer more and more health-care to maximize their utility. The cost would have to be evaluated by a different unit of measure, such as time. In this case, unless the time it took to receive the needed medical treatment was greater than the benefit, the consumer would choose to continue to consume additional units of health care. Although time is a valuable asset, if people think that receiving the health-care would result in 100 % certainty to make their head-ache to go away, the consumers would gladly wait even extended periods of time for the treatment. Because time can be used as a measure of utility of a good or a service, time is money.
Now some of you might protest and present counter-arguments that time cannot be money, since time is always running out and there's no way to stop you to consume your time. If you have money, it is quite certain that just as time, it is also always running out to cover some expenses in your life. The dilemma comes when you consider dollars and time. The time in your life is a limited resource, but dollar bills (hopefully) aren't.
Like any other theory, this has its flaws. If you have any unnecessary and too serious arguments concerning the theory, I'm glad do discuss and speculate the matter for several hours in the local pub. But I'm not planning to try to maximize my utility by passing out into a ditch.
PS. John Lennon once said that "The time you enjoy wasting is not time wasted." Therefore the money you enjoy spending while shopping isn't money wasted. All you shopaholics out there might understand this better than me.
Text: SW
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