Daniel Hamermesh: ‘You Think That Your Problem is Money but Your Real Problem is Time.’

– It is very nice to see you and thank you very much for your time, “the most valuable and scarcest resource”, as you wrote in your book “Spending time”. Economics is about allocation of scarce resources and the economists consider such resources as capital and labor. What does time mean as a resource, what do you think?

– The main thing is the time is limited. Even we are living a little bit longer we still have 24 hours in a day. And what interesting is we are getting richer, not fast enough, but we are getting richer. And in the US, for example, and most of western Europe in the last 60 years people’s incomes are more than tripled. But it’s not getting much more longer: it was 24 hours a day when I was a teenager in 1960 and it is still 24 hours a day. But, compared to money, time is getting scarcer and scarcer. And for that reason it’s increasingly relatively valuable, becoming scarcer and scarcer compared to other resources like labor, like capital.

– I don’t know – I mean, in some sense computerization, digitalization is a time saver. Look, 30 years ago we could not have a television interview like this. I don’t think that you would pay for me but you would have to pay for me to fly over to Moscow. And that would be incredibly time-consuming for me. [Now] we can achieve the same output in much, much less time also for much less money, too. So, in some sense, digitalization economizes on time but, on the other hand, I can waste my time looking at Facebook, which is digitalization. And that’s the way of consuming time. So, really, it is not clear which way time and digitalization go. It depends on a particular aspect of digitalization that we are talking about.

– Look, I have not been to an office of mine – I have two offices: one in Texas and one in New York – I have not been to an office since February 2020. I don’t need it – they are closed – being at Zoom therefore I’m saving… in New York City I’m saving about an hour a day commuting (I don’t need to fight a subway to go to my office), in Texas I’m saving 45 minutes a day (because I don’t have to bicycle 3 kilometers each way). So, in that sense, I think this is true for many, many people – without commuting time people have a little bit more time and once they get used to the technology, that we are getting used to right now of zooming, I think people have a bit more time. And I think it will stay permanent, I don’t think people are going back to the offices five days a week because it is a waste of money and a waste of time. So, in some sense, the crisis has, probably, made time a little bit less valuable and made us all better off in that one narrow aspect.

– Yes, I saw this movie, I know it.

– This is not an original idea. Think about Marxian theory: Marxian theory is about a labor theory value. What is labor but the time of people? So, in that sense, making time the currency is probably an idea at least as old as Karl Marx even on science fiction. The most people do think about time as money and a very real sense of scarcity of time makes us treat it as if it worth money. I think the real issue is that time becomes relatively scarcer. We run and run more and more and more and try to cut corners. And, in a sense, we feel like we are rats in a tube and we’re running faster and faster and faster. That doesn’t make us very happy.

– I tell people who are stressed for time: if you want to be less stressed for time, become a monk. Nobody is going to do that. That is not going to happen. And therefore, there’s very little one can do since we want lots of things other than define certain things in our life, we all do to relax. And so, I think the best thing one can do – giving people’s desires for more income and more goods – is to find a little something which you can do to keep you off the rate race. But getting out of the rat race – that’s not going to happen, and problems are going to get worse and worse as we get wealthier and wealthier.

– I think the issue there is that companies can’t do very much. Let’s say – everybody talks about 32-hour work week and how wonderful that would be. I guarantee if one company did that, I do not think they can remain competitive. The only way that we can have this kind of imposed relaxation is if there is some government mandate to do it. The US is crazy in this regard. We have the shortest annual holidays of any country in the world. There’s no governmental requirement that people have holidays from work, many companies will give two weeks per year, a few ones give four. The cost of it in terms of lost production is very small but unless a government mandates, companies are not going to do it on their own – they can’t afford it. So, either I somehow make myself behave the way to be more relaxed or some national government mandates that we all do something to make us more relaxed. But there’s no intermediate step.

– It is a trade-off and yet, as а free market economist, I would think the trade-off would be what we want. But because of my desire to be a little bit ahead of everybody else, my competitive desires, I and others will work harder – not likely somebody can forces us to slow down. So, in that sense, we call it in economics a low-level equilibrium trap. We’re stuck cause don’t want to lose out but if we are forced to do something we all’ll be better off.

– I think the evidence shows that professors do earn less than other people and the reason is to some extent you are paying for the flexibility of your job, you are paying for freedom. Now regarding men and women we were looking at: in most families if the children get sick who has to stay at home? Typically it’s the wife. Who manages the household? Women do more different things each day than men do. I wouldn’t say it’s discrimination on time, it’s rather world, which maybe views it discriminatory, makes them more stress for time.

– No, it’s narrative. It’s narrative but to make sure that narrative is precise we use mathematics as a tool to guarantee precision. But it’s surely narrative. The best economists are those who do the narrative.

– Yeah. John Maynard Keynes said that to be a good economist you have to be a good writer, a good historian and a good mathematician, but you shouldn’t be too good at anything because if you are too good at any one of those that’s all you do.

– Well, a nice thing about being a) an academic, and b) being partly retired, I have time for almost everything. 30 years ago I was incredibly stressed for time: I was at peak of my profession at the time, peak of my skills. I gave graduation speeches where I’ve told of 20-year-old: look, you think that your problem is money but your real problem is time. And you need to think how to economize on time and enjoy it, rather than keep on running and running and running. I’m at the certain age now, which you hopefully get to some day also, when time is last of a problem. But for the average 40- or 50-year-olds it is a real problem.