When time is money: The effect of hourly payment on the evaluation of time
Section snippets
Background and hypotheses
Evans, Kunda, and Barley’s (2004) ethnographic study of technical contractors provides one important clue as to what types of organizational practices might influence the psychological evaluation of time. The informants in Evans et al.’s (2004) study included engineers, software developers, technical writers, and information technology specialists who overwhelmingly sold their services to firms in exchange for an hourly wage. Being paid by the hour and the concomitant requirement to bill firms
Study 1
The mental accounting literature provided the starting point for our first study. The tendency for individuals to track costs that are relevant to a particular expense and ‘assign’ these costs to the relevant mental account are well documented (e.g., Heath, 1995, Heath and Soll, 1996, Thaler, 1980, Thaler, 1985, Thaler, 1999). Recent research, however, has revealed that people tend not to use the same mental accounting heuristics associated with money for making decisions about time (Soman, 2001
Study 2
In Study 2, we drew upon publicly available survey data where respondents were asked whether or not they would choose to trade more of their time for money. The wording of the question coupled the use of time for work directly with earning more money. This hypothetical question highlights the real life tradeoffs inherent in time’s finite character as a resource, but simultaneously affords a subjective assessment of how respondents would make this tradeoff regardless of the real world
Study 3
If exposure to hourly payment plays a role in people’s willingness to trade more of their time for money, we predicted that the greater prior exposure an individual had to hourly payment over the course of their working life, the more willing they would be to trade more time for money. Moreover, if it is evaluability that affects this tradeoff, and what hourly payment does is make the economic value of time more salient and explicit, then it is possible that people with little or no prior
General discussion
We tested the hypothesis that exposure to the organizational practice of hourly payment would lead individuals to both mentally account for their time more like money and weigh the economic returns of how they allocated their time more heavily in tradeoffs between time and money. Although previous research has documented that people treat time differently than money, we showed that people paid by the hour were more likely to be economic evaluators of their time. While prior research has
Acknowledgment
Throughout this project, Chip Heath provided critical suggestions and insights for which we are indebted. Helpful conversations with Dale Miller, Sheena Iyengar and Lara Tiedens were also invaluable.
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