The Time Value of Money Vs. The Money Value of Time

Financial IQ

Last month I did some volunteer work that was equal parts selfless and clueless and which would have made an economist cry.

My daughter’s school holds an annual book fair to raise money to buy library books and I volunteered to coordinate it this year. A local bookstore brings over crates of books and kids come in throughout the week to buy them. Proceeds are split between the bookstore and the library. Literacy is promoted. Everybody wins.

Well, sort of. Before I get into the “where did I go wrong?” handwringing, a few observations:

First, anyone who thinks kids don’t read anymore should drop by an elementary school book fair. This particular event was held at a pretty typical urban public school and the kids went crazy for the books. Not just the new Wimpy Kid book, but all sorts of books: Arts and crafts books, books about the scariest and most disgusting things on earth, graphic novels, picture books, and the perennial favorite of kids everywhere, the Guinness Book of World Records. After the book fair was over, kids kept stopping me in the hall to say, “I wish the book fair would go forever.” (I did remind them that they can get library books for free.)

Second, kids do not understand sales tax. I know, why should they? But man, I saw a lot of steaming brows when I had to explain that you can’t buy a $10 book for $10. Actually, come to think of it, I grew up in Oregon and I don’t understand sales tax, either.

Finally, having a little money in their backpacks brings out the best and the worst in kids. I saw kids very politely begging their friends for money. (This is against the rules, of course.) I also saw kids spontaneously offering their own money to friends to cover annoyances like sales tax or being two dollars short for Wimpy Kid.

The value of time

In short, the book fair is a big, fun lesson in literacy, generosity, fractions and decimals, all bound up. What could be so bad about that?

Here’s the problem: I ended up taking almost the whole week off work, unpaid, to sit in the library selling books. I’m not complaining about that, though. Who wouldn’t prefer to hang out with kids, reading books, instead of working?

Conservatively, however, I missed out on billing $600 worth of work; call it $450 after taxes. The book fair raised about $150 for the library. If I’d gone to work and just donated my paycheck, the library could have bought a lot more new books.

Even though I thought I knew better, I became the walking incarnation of the conclusion of a famous economics paper:

“The inherent ambiguity of the value of time promotes accommodation and rationalization and may explain the rather obvious observation that most people are a lot more willing to waste time than money.”

To help me make sense of this, I called Laura Vanderkam, author of the time management book, 168 Hours, and the forthcoming personal finance book, which I highly recommend, All the Money in the World.

“It sounds like it was incredibly enjoyable for you, hanging out with your daughter and her friends and encouraging young people to read,” says Vanderkam. “Those of us who write for a living certainly hope younger people will read in the future.”

But what about the money?

“It doesn’t have to be an either-or question, right?” she says. “Maybe there was a way you could have done both. Maybe you could have split the work with someone else and donated moremoney that you had earned during some of the other time.”

Indeed, I rounded up a few volunteers, but not as many as I wanted, and I was too reluctant to delegate and let volunteers take over so I could cram in a little work.

The lessons in math and interpersonal relations, the “promotion of literacy”—these happy side effects of the book fair, are fuzzy and hard to put a price on. The value of getting new books for a library that desperately needs them is hard to dispute.

So, I put it to Vanderkam bluntly: Next year, if the responsibility falls to me, shouldn’t I cancel the book fair and promise to donate a week’s pay to the library instead?

“Probably,” she agreed. “When trading partners specialize in what they do best, it produces the most economic efficiency. When people focus on what they do best, that produces more efficiency, too.”

(This, of course, raises another question: If I can inveigle someone else into running the book fair next year, do I still have to donate my paycheck? I do? Yeah, that’s what I thought.)

On the bridge

Until the other day, I’d filed the book fair episode into the capacious lobe of my brain reserved for salting away dumb mistakes and trying to forget about them. I thought of it again while I was driving across the 520 floating bridge connecting Seattle with Bellevue and the rest of the metro area eastside.

This bridge has been a nonstop traffic jam, even on weekends, for as long as I can remember. I don’t cross it very often, but I always dread it when I do. A couple of weeks ago, however, the state slapped a toll on the bridge to help pay for a replacement bridge.

Now the crossing is a delight. The Seattle Times reports that on one section of the bridge, the average speed jumped from 19mph to 65mph. That’s tooth-grindingly slow to illegally fast. The traffic jam has moved to the other bridge.

Is it better to pay $5 to cross the free-flowing bridge or drive out of your way to take the non-toll bridge, which may or may not be congested? Technology to the rescue: A local developer has created a free smartphone app that tells you the current toll on the toll bridge (it varies throughout the day), the estimated crossing timefor each bridge and the cost in gas.

You still have to decide how you value your time. Are you economically rational or a time-wasting stereotype like me?

Matthew Amster-Burton is a personal finance columnist at Find him on Twitter @Mint_Mamster.


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