Buying Time: The Best Use of Money
“Money is used to buy goods and services” they explain in practically any introductory course in economics. And, indeed, money can buy almost everything. However, what is the best use for money? How can it be used in a way that maximizes people’s satisfaction?
Much has been theorized about this issue, but the good thing about modern economics is that it can also be experimental. A group of researchers from the Harvard Business School and the University of British Columbia put it into practice with somewhat surprising results.
What they did was give money to a group of people telling them to spend it either on something that saved them time or material goods for them. And then they measured the satisfaction that the spending of money gave them.
We all want some whim, and giving us money to spend on material goods sounds attractive. However, the satisfaction was greater when the expense was devoted to saving time. The participants used the money for tasks such as asking for a home purchase, hiring someone to clean the house or simply ordering someone to do some errands.
Similar results have been seen on other occasions, such as in a survey in which more than 6,000 adults from several Western countries participated: the satisfaction of spending money on saving time is greater than that of other expenses.
Why is saving time so necessary?
Life in the West is very stressful. Work, household chores, the pace of life in general leaves little time to enjoy. And not only that, but the mental burden of everything that needs to be done, the list of pending tasks, is also a strong depressant.
Spending money on things that reduce these tasks is a relief. And yet many times we choose not to spend money on it, according to the study. But the truth is that every time we spend more money to save time, the satisfaction it produces is a good driver.
A very clear example is how Internet sales are growing exponentially and are even putting a lot of pressure on lifelong retail. The time saving involved in buying online means that even the original business case (lower prices, greater availability of products) is no longer the main reason for success. The important thing is that it saves time for its users, who do not have to travel to buy.
Even in sectors where catalog shopping was unthinkable a few years ago, online shopping is taking off at a very important rate. Even with associated shipping costs, customers are willing to pay. For example, going to make a big purchase at a supermarket usually takes an hour. Yes, it is true that many people do not buy food “online,” but there are other reasons such as the possibility of choosing the genre that in fresh products is still an important factor.
Some expenses in saving time have been around for decades. For example, people have often hired someone to clean the house. But above all, there is a very important expense of the families that is dedicated exclusively to this task of saving time: the car.
The car as an exponent of this behavior
Many families have cars. And if we analyze financially, this option is a disaster: it costs a lot of money, so much so that you have to finance the purchase, it has very high maintenance costs, and on top of that, very little percentage of time is used.
And what is a car for? If it were to go on vacation, it would be rented, since it is much more profitable. But no, people who have a car usually use it every day, although for only a short time.
The goal of car owners is to save time. In a large city, many people will spend the morning in the car to get to work, the same time it would take public transport. But the return to the home is usually faster. In other cases it may be more. And if you have to take and pick up the kids from school the time savings are brutal.
And the price of housing?
Normally the price is higher near the center of the cities and close to areas with a high density of jobs. Most people prefer to live in areas where travel is minimized, precisely to save time. And that’s why housing is more expensive there.
It is true that the price of housing also influences other factors, but minimizing the displacements, which is the maximum exponent of the loss of time, is one of them.
In short, spending money on saving time is much more satisfactory than in other types of expenses, and many times humans demonstrate it with our actions. But if we do it consciously, we may even improve this satisfaction.