Ever since Benjamin Franklin urged citizens to “Remember that time is money,” economists have concurred that both are equally valuable commodities. More than 250 years later, however, researchers have found that consumers value cold hard cash more than their time. The new study shows that consumers find it easier to rationalize a bad outcome after paying for an item with their time than with their wallets.
“Our research shows that the concept of time is easier to write off than is money,” said Erica Okada, a University of Washington assistant professor of marketing who co-authored the study with Stephen Hoch, professor of marketing at the University of Pennsylvania’s Wharton School. “People are relatively certain about how much their money is worth, but when it comes to their time, people are less certain about its value.”
Unlike previous research that focused almost exclusively on money-based transactions, this study used time as a form of currency. Researchers conducted five experiments to determine how the inherently ambiguous value of time influences consumer purchasing behavior.
Three hundred sixty undergraduate students completed a questionnaire that presented two scenarios in which they were told they had already consumed a product that they had acquired in exchange for either four hours of work or $50. In one scenario, the students were told their experience with the product was good, in the other negative.
Okada and Hoch noted a greater difference in reaction between a good experience and a bad experience among those who paid in money. The difference between the levels of satisfaction following a good experience and dissatisfaction following a bad experience was significantly less among those who paid in time.
As suspected, said Okada, the experiments revealed that consumers have an easier time rationalizing a bad outcome after paying with time than hard-earned cash. The ambiguity in the value of time allows people to do this, whereas it is more difficult to do so with money, she added.
Today, money is the most universal form of currency. It is not, however, necessary for all exchange transactions. Long before money was institutionalized, Okada said, goods were exchanged among people in the form of bartering. In certain parts of the world, moneyless exchanges exist as the dominant form of trade even today.
“In contemporary economic systems, consumers are used to transacting primarily with money and are accustomed to assessing its value,” said Okada. “The average consumer in today’s world hasn’t learned how to assess the price or value of time.”
The study, “Spending Time Versus Spending Money,” appears in the September issue of Journal of Consumer Research.
For more information, contact Okada at (206) 543-4589 or firstname.lastname@example.org