“Time flies like an arrow; fruit flies like a banana.”
It is a deeply sobering fact that like any other student, I have had to grapple with meeting the deadline for this article as well as the perils of leaving my dinner in the open while I was typing this. Again, like the typical student, I wonder where all the time went and how I could buy some.
As it turns out, life (with the help of never-ending assignments) has set us up pretty well for a lifelong education in the scarcity of time. And so it was one late, late night spent doing Year 12 coursework that my inner economist asked: “If time is scarce, is it a resource?” After all, when we make any decision, don’t we also factor into our opportunity cost the time we spend on doing an activity?
My interest piqued, I began research and stumbled upon “The Economics of Time as a Resource”, a paper by Christopher Klein of Middle Tennessee State University. In this paper, Klein confirms my supposition; time is a resource which “once consumed, cannot be consumed again”. In addition, time has aspects of public goods in that no one can be excluded from using it, and that its consumption by one does not reduce the amount available for another.
At the same time, for each individual the amount of time possessed is unknown yet finite. Moreover, the time we have cannot be exchanged between individuals.
So given that it is a good, what of its demand and supply? As I see it, each person supplies time out of the finite yet unknowable amount s/he has. The demand comes from various activities competing for our time: say, finishing this article or my dinner. Accordingly, allocation of my time would be determined by the return I get from performing said activity for the said period of my depleting life (sad, I know). This idea of matching returns to opportunity cost is, of course, the operating principle of the labour market: wages are paid to workers for spending their time on work rather than something else.
We might even apply concepts of elasticity to time. More time would be spent on important activities than on frivolous ones; thus demand from priorities (blue line) would be more inelastic than that from leisure (red line).
And supply? It is clearly perfectly inelastic, as nothing we do will affect the amount of time in that period of time. But here I depart from Klein’s assumption of a constant rate of time. As he has suggested, time may seem to pass slower or faster according to individual experience. I think that such variations would affect the position of the supply curve. When time seems to be slipping through your fingers, quantity supplied would seem to be lower (Qs1) and thus you spend your time attending to more gainful, important issues [P(blue1) > P(red1)]. However, when the minutes crawl by (Qs2), that’s when you are more willing to while them away on the small stuff [P(red2) > P(blue2)].
So far so good. As it is usually taught, economic decisions hinge upon the opportunity cost of performing a given activity; namely, the utility or satisfaction we get from it compared to the next best alternative.
However – and this is where it gets interesting – moving beyond the characteristics of time per se, Klein ventures to bring time into the equation. For example, even practically, our decision-making involves not only a choice between several activities; it also takes into account their consequences. A very relevant example (to me) would be choosing between finishing this article or finishing my dinner (which would postpone imminent gastritis). While choosing the former still allows choosing the latter at a later point, the converse is not true. Certain decisions preclude certain alternatives in the future. Therefore, the rational decision-maker is now expected to choose between entire alternate timelines.
And if that were not mind-boggling enough, Klein goes further with a neat thought experiment on time travel. Assuming it was possible, sans cost and butterfly effects, we might be able to re-live a period and re-consume a resource multiple times, even transferring money between instances. In such a case, scarcity becomes irrelevant as resources (and the means to obtain them) are always to be had from another time. This means that scarcity depends on the fact that we cannot reuse a resource twice, which in turn depends on our one-way linear experience of time. As a result, he argues, scarcity, and therefore the whole of Economics, essentially revolves about the question of how to spend time.
So, how are you spending your time today?