Friday, February 10, 2012

inefficient time use?

A basic result of microeconomic theory, the equimarginal principle, is that, if you are allocating your resources efficiently (spending your  money in the way that makes you best off), the marginal utility of each good you consume should be the same.

For example, let's say there are only two goods in the world you can buy: apples and hamburgers. The nth dollar you spend on apples gives you 6-n dollars worth of happiness (so buying 2 dollars worth of apples gives you (6-1)+(6-2)=$9 worth of happiness.) The nth dollar you spend on hamburgers gives you 10-2n dollars of happiness (so buying 2 dollars of hamburgers gives you (10-2)+(10-4)=$14 worth of happiness.) If you spend 3 dollars on hamburgers and nothing on apples, the third dollar is getting you an extra $2 of happiness, whereas if you instead bought $2 of hamburgers and $1 of apples, you would get $5 from the apple, so you should reallocate one dollar to apples. More generally, if the last dollar you spend on one thing makes you less happy than you would be if you transferred that dollar to another item, you should do so. Therefore, the last dollar you spend on every good should be the same; i.e. your marginal utility of consumption of every good is the same.

But the same thing applies to time use. Time is another scarce resource that we allocate between many possible activities, so it should be true that the last minute we spend on every activity is equally enjoyable. This is largely ignored (the diminishing returns to experiential utility in time, more generally) when analyzing time use. Hence, you see scholars puzzled by the fact that women in Texas are happiest* when having sex, and yet only 12% do this on a given day for an average of less than 15 minutes per day. Why aren't they, uh, doing it more often?

If the marginal utility of sex is sharply diminishing in time, this isn't surprising at all. No more surprising than that people whose favorite food is fudge only eating an ounce of it at a time. It's true that the first bite of fudge makes them really happy, much more happy than anything else they eat, but it's also true that eating more would be a suboptimal choice.

*Not necessarily the authors of the linked study; I've just seen it referenced in that context several times.

1 comment:

farmland investments said...

Oh, I was just surfing through blogs (as a Brit living in the States, I love American blogs), and I like this post. From what I have come to understand about the States, the cost of education is horrific and time consuming in terms of years' out of ones life (though that is true everywhere). Is this an argument that people would be better served by less time spent educating themselves?