Time isn't money: Study finds that we spend the resources differently

Economists usually treat time like money – as another scarce resource that people spend to achieve certain ends. Money is used to pay for things like furniture and plane tickets; time is spent assembling the do-it-yourself bookshelf or searching for cheap flights on the Internet. But despite the old adage that time is money, the two are far from psychologically equivalent, reveals a study from the April issue of the Journal of Consumer Research – particularly when it comes to consumer spending decisions.

In a series of experiments, Ritesh Saini (George Mason University) and Ashwani Monga (University of Texas, San Antonio) demonstrate that a qualitatively different form of decision making gains prominence when consumers work with time instead of money. Specifically, consumers thinking about expenditure of time are more likely to rely on heuristics: intuitive, quick judgments based more on prior experience than on analysis of the information presented.

For example, one experiment had participants consider the purchase of a used car. They were told that a search on a used-car website had yielded 80 cars meeting their criteria but that viewing each accident record would take either $1 or 5 minutes of time. They were then asked how many records they would like to view, with a catch: the researchers used classic experimental “anchoring” techniques to manipulate the answers.

Participants were asked whether they would view “up to 2” or “up to 40” records, before indicating the specific number of records they would view. The use of an anchor, for those thinking in terms of time expenditure, turned out to have a significant impact.

When the anchor value was high in the time condition, consumers chose to view an average of 23.7 accident reports, versus 9.1 when the anchor value was low. The number of records consumers in the money condition chose to view was statistically the same, irrespective of whether the anchor value was high or low.

“People face difficulties in accounting for time because they do not routinely transact in time as they do in money,” explain the researchers. “Although people in some professions (e.g., lawyers) do keenly monitor their time expenditures, most other people are not trained to do so.”

Furthermore, by measuring response times—the time taken by participants to arrive at decisions—the researchers find supporting evidence for the idea that quick and easy heuristics are used more in time than in money.

“These results suggest that businesses need to be aware that decisions regarding products and services might be made differently if consumers spend their time rather than money,” Saini and Monga explain. “Unlike money which is unambiguous—a dollar is a dollar in all circumstances—the value of time changes from one situation to another.”

Source: University of Chicago

Related stories:

Google ventures into virtual reality with 'Lively'
(AP) -- In the latest expansion beyond its main mission of organizing the world's information, Internet search leader Google Inc. hopes to orchestrate more virtual socializing on the Web.
Researchers synthesize compound to flush HIV out of hiding
Any hunter will tell you that when your quarry goes into hiding, you have to flush it out to get a good shot at it. Such is the case with HIV, the virus that causes AIDS.
'4-D' ionosphere map helps flyers, soldiers, ham radio operators
Today, at the Space Weather Workshop in Boulder, Colo., NASA-funded researchers released to the general public a new “4D” live model of Earth’s ionosphere. Without leaving home, anyone can fly through the dynamic layer of ionized gases that encircles Earth at the edge of space itself. All that’s required is a connection to the Internet. Airline flight controllers can use this tool to plan long-distance business flights over the poles, saving money and time for flyers.
Would you steal a buck? How about a can of soda?
It's been a long road from being engulfed in flames in an explosion in Israel to leaving dollar bills in dorm refrigerators at MIT. But in an odd way, it's all connected.
IBM Reveals Five Innovations that Will Change Our Lives Over the Next Five Years
Unveiled today, the second annual "IBM Next Five in Five" is a list of innovations that have the potential to change the way people work, live and play over the next five years.
UK government could force house price slump, economist warns
Gordon Brown risks sending house prices into crisis if he insists on building millions more homes in Britain, a University of Nottingham economist has warned.
Carnegie Mellon algorithm identifies top 100 blogs for news
Being among the first to pick up on Internet news and gossip and rapidly detecting contamination anywhere in a water supply system are similar problems, at least from a computer scientist’s point of view. Both can be solved with a versatile algorithm developed by Carnegie Mellon University researchers.
A new window on the universe
Using new tools to look at the universe, says Patrick Brady, often has led to discoveries that change the course of science. History is full of examples.

News discussion:

General Science news