Call for Contributions: Implied Marginal Value of Time from Good/Services
If you buy a good or service with the hope that doing so will save you time, then doing so creates a lower bound on the marginal value of your time. For example, if you expect that filing your taxes by hand will take 5 hours, and filing your taxes with a tax-preparation software like TurboTax will take you 1 hour, and this software costs $50, and you are neutral between filing taxes by hand or by software, then the you should buy the software if and only if you value the marginal unit of your time at or above .
Rationalists do these kinds of calculations all the time, but as far as I can tell, they aren’t written down. This is bad, because a) everyone has to redo the math and b) coming up with ways to save time is hard. I just created a spreadsheet where I’m going to put all of the value-of-time results I compute from now on, and would appreciate it if others contributed to this sheet. Ideally, we’d get the sheet to the point where whenever the value of your time changes, you sort the timesavers by that value, and then you can start/stop buying most of the easily available timesavers for the new value.
Useful related concept: Neutral hours
I would add something about differential cost of time: morning time for me is more expensive, as well as “speaking time” and new things per day is also limited. So if I need to spend 1 hour in the morning to verbally explain task to a helper, I better spend a few hours in the evening to do it myself.
The spreadsheet doesn’t include the Turbo Tax example.