Title

Valuing the Time of the Self-Employed

Author(s)

Daniel Agness Daniel Agness (UC Berkeley)

Travis Baseler Travis Baseler (University of Rochester)

Sylvain Chassang Sylvain Chassang (Princeton University)

Pascaline Dupas Pascaline Dupas (Stanford University)

Erik Snowberg Erik Snowberg (UBC and University of Utah)

Abstract

People’s value for their own time is a key input in evaluating public policies: evaluations should account for time taken away from work or leisure as a result of policy. Using rich choice data collected from farming households in western Kenya, we show that households exhibit non-transitive preferences consistent with behavioral features such as loss aversion and self-serving bias. As a result, neither market wages nor standard valuation techniques (such as the Becker-DeGroot-Marschak—BDM—mechanism of Becker et al., 1964) correctly measure participants’ value of time. Using a structural model, we identify the mix of behavioral features driving our choice data. We find that these features distort choices when exchanging cash either for time or for goods. Our model estimates suggest that valuing the time of the self-employed at 60% of the market wage is a reasonable rule of thumb.

Creation Date

2023-01

Section URL ID

Paper Number

310

URL

https://www.sylvainchassang.org/assets/papers/value_of_time.pdf

File Function

Jel

C93, D61, D91, J22, O12, Q12

Keyword(s)

value of time, non-transitivity, labor rationing, loss aversion, self-serving bias

Suppress

false

Series

3