B., a loyal MR reader, asks me the following (and he also manages to send me a paragraph which for whatever reason won't indent properly):
"I've been struggling with an economics issue lately that I think is universal: How much do I value my free time? I usually estimate it at about $50 or so per hour, but what happens to that as I have less and less of it due to work? And by how much should my salary increase for this corresponding decrease in the amount of time I have to enjoy that time? I've taken a crude stab at answering this on my blog (http://meanderingwoods.blogspot.com/2009/06/how-much-is-free-time-worth.html) but I'm no economist – actually I'm a psychologist by study and a risk consultant by trade. I would imagine that there is some literature on this but I was unable to locate much through Google. I would appreciate it if you could point me toward something or maybe bleg about it."
As usual, the correct answer is "it depends," but here are a few principles:
1. Don't value your time by your implicit wage rate, no matter what your Econ 101 text says. For most jobs you are assigned some lumpy tasks and you don't control your work hours at the margin as much as you might like to. The key question is whether the overall pattern of your time is an enjoyable one and marginal calculations aren't always a good way to make that estimation.
2. Ask the simple question: at what valuation of my time will I maximize the amount I look forward to each day, defined over the next five years? If your next five years are not so tolerable, reexamine what you are doing and that includes revaluing your time. For instance you might be an irrational workaholic or a lazy bum.
3. Look to the economics literature on "golden rule" and "steady-state" path comparisons to address this problem. If need be utter the word "Flow" and try to remember how to spell that guy's name so you can google it.
4. What do you want time for anyway? When is your time ever "free"? If you choose to work more for money, isn't that time "free" too? Only if your job is a total drudge should you frame the choice this way.
5. Focus on defining the experiences you value most, and how to get more of those experiences, and wise money/time choices will flow from that approach.
Readers, do you have better…dare I call it…advice?