THE TIME PRICE SYSTEM ~- ITS APPLICATION TO THE MEASUREMENT OF PRIMARY OUTDOOR RECREATION BENEFITS Thesis for the Degree of Ph. D. MICHIGAN STATE UNIVERSITY ARNDT SEIFERT 1971 L I BR A R Y Michigan State University This is to certify that the thesis entitled TELLS TILE PRICE £3 £0le - I'r‘o‘ :Jfi-‘LICAL‘ILI’I QC “fig-iii; IUiL-LSLETLXLIIT CF Prill’lhfii OU‘LJCQR diLJl-‘QAL‘IUIT Eggléjgb‘lfb‘ presented by Arndt Seifert has been accepted towards fulfillment of the requirements for Ph . D . degree in Economics Date 2/25/72 0-7639 3— “A's-‘5. ABSTRACT THE TIME PRICE SYSTEM--ITS APPLICATION TO THE MEASUREMENT OF PRIMARY OUTDOOR RECREATION BENEFITS BY Arndt Seifert The purpose of this study is to present a method of how primary outdoor recreation benefits can be measured. Primary economic benefits are measured by what people are willing to give up in order to consume goods, i.e., by their price. Any price has two components: money and time. In the case of consumption of (public) outdoor recreation, the price reduces mainly to time, as no appropriate money price exists in the market other than nominal entrance fees. The time price cannot be expressed only in terms of pure time units (hours, minutes, etc.), but also in terms of money units (S), for the wage rate can be regarded in most cases as a minimum opportunity-cost estimate of consumption time. Only in the case when actual work time is smaller than desired work time (undertime) does there exist a weak possibility that the wage rate may overvalue the opportunity— cost of leisure. This possibility, however, may be excluded Arndt Seifert when sufficient undertime—compensations (unemployment insurance, etc.) exist. In order to compute a measure of total primary outdoor recreation benefits, we must add to the money time price, i.e., to the foregone wages of the visitors, the following elements: a. an estimate of the money price of outdoor recreation, b. the value of external economies of outdoor recreation, c. entrance fees, and d. an appropriate value of the travel time. The empirical measurement of the time price presents no great difficulties, since visitor-day statistics for U.S. recreation areas are available. If an appropriate average wage figure for a particular outdoor recreation area is not available, one can resort to minimum wages. It is shown that the system of time prices could serve as a (supplementary) highly equitable public goods (accounting) price system and thus could help to solve the basic economic problems with which any society is confronted. THE TIME PRICE SYSTEM--ITS APPLICATION TO THE MEASUREMENT OF PRIMARY OUTDOOR RECREAT ION BENEF ITS BY Arndt Seifert A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Economics 1971 TO MY PARENTS ii "The natural beauties of a place of fashionable resort have a direct money value which cannot be over- looked; but it requires some effort to realize the true value to men, women and children of being able to stroll amid beautiful and varied scenery." Alfred Marshall Principles of Economics, IV, III, §7 iii —-M-r—~I.I an“ AC KNOWLEDGMENTS The value of a dissertation is not measured by the amount of time the author spends in writing it but, to a certain extent, by the quantity and value of reading—time it "consumes" and the discussion it generates. This dissertation owes much to the most valuable time Professors Thomas R. Saving, Jan Kmenta and Paul Stressmann spent in reading it. To them I wish to express my profound gratitude. I am also indebted to Professor C. F. Carter and Wilhelm Neuefeind for reading and commenting on section 6 of Chapter IV. Further, thanks also go to Jack L. Knetsch, the Bureau of Outdoor Recreation in the Department of the Interior and to the U.S. Forest Service, for providing me with most helpful information. The study was made under a Resources for the Future, Inc. Doctoral Dissertation Fellowship. To this corporation also go my sincere thanks. However, the conclusions, Opinions, and other statements in this study are those of the author and are not necessarily those of Resources for the Future, Inc. iv TABLE OF CONTENTS Page DEDICATION . . . . . . . . . . . . . ii ACKNOWLEDGMENTS . . . . . . . . . . . iv . LIST OF TABLES . . . . . . . . . . . . Vii LIST OF ILLUSTRATIONS . . . . . . . . . Viii LIST OF APPENDICES . . . . . . . . . . X LIST OF ABBREVIATIONS . . . . . . . . . Xi INTRODUCTION . . . . . . . . . . . . 1 Chapter I. THE SOLD TIME-OWN CHOICE MODEL . . . . 5 II. REVIEW OF MAJOR ATTEMPTS AT MEASURING PRIMARY OUTDOOR RECREATION BENEFITS . . 12 III. TIME AND ECONOMICS . . . . . . . . 36 1. Time Scarcity . . . . . . . 37 2. The Characteristics of Time . . . 46 3. Money Price System vs. Time Price System . . . . . . . . . 51 IV. THE ECONOMIC VALUE OF TIME . . . . . 70 l. The Assumptions of the Model . . . 75 2. Equilibrium Solutions . . . . . 94 3. A Diagrammatic Demonstration . . . 99 4. Disequilibrium Situations . . . . 112 A. Deviations of Actual from Desired (Planned) Sold Time . . 112 B. Unexpected Short-Run Distur- bances and Other Alleged Causes . 135 5. The Effect of a Different Distribu— tion of Own Time--Solc Time (The 145 Time Distance Approach) . . . . V Chapter Page 6. The Direct Price of Own Time . . . 183 V. THE TOTAL PRIMARY OUTDOOR RECREATION BENEFIT O O O O O O O O O O O 191 l. Admission Fees . . . . . . . 191 2. Travel Time . . . . . . . 192 3. External Economies of Outdoor Recreation . . . . . . . . 194 4. Selected Problems . . . . 198 A. Time Prices and Outdoor Recreation Quality . . . 198 B. Activity- Variation of Outdoor Recreation Benefits . . . . 201 VI. SUMMARY AND CONCLUSIONS . . . . . . 203 BIBLIOGRAPHY . . . . . . . . . . . . 207 APPENDICES . . . . . . . . . . . . . 221 vi m ‘ LIST OF TABLES Table Page 1. Matrix of defined time concepts . . . . 98 2. Frequency of major ST—OT interval sizes per year of a representative worker . . . 151 3. Computation of K-values . . . . . . . 178 vii Figure 10. 11. 12. 13. 14. LIST OF ILLUSTRATIONS The sold time (ST) - own time (OT) model . Demand and supply of lifetime . . . . The own price of lifetime . . . . . The sold time-own time model: a 100% OT- preference . . . . . . . . . The sold time-own time model: the own time surplus and overtime wage rates The sold time-own time model: vacation pay . . . . . . . . . . . The sold time—own time model: the "kinked" wage line . . . . . . . The sold time-own time model: income com- pensations for inferior ST-OT interval distributions . . . . . . . . The sold time-own time model: deviations of actual from desired sold time Undertime-overtime) . . . . . . . The sold time-own time model: own pro— duction . . . . . . . . . . . The sold time—own time model: sold time plus own production . . . . . . . The sold time-own time model: own time as a compensation . . . . . . . . The sold time-own time model: own 0 production as undertime compensat1on . The sold time-own time model: the value of OT after overtime . . . . . . viii Page 44 71 89 100 103 104 110 113 118 122 130 132 146 —; I Z, ‘ ‘- u: _ Figure 15. 16. 17. 18. 19. Page A time period with two OTI's and their time-distances . . . . . . . . . 153 The value of two homogeneous consumption experiences and their time distances . 166 Indifference curves with varying time distance distributions . . . . . . 171 The sold time-own time model: purchase of additional leisure . . . . . . 185 The time production growth model . . . 226 ix wh- W‘il— LIST OF APPENDICES Appendix Page A. The Theory of the Production of Time . . 22 B. Travel Time and the Price of Leisure: A Critique . . . . . . . . . . 231 C. Visitor-Day Statistics . . . . . . 243 OR OT ST OTI STI TD TDD ORRRC LIST OF ABBREVIATIONS Outdoor Recreation Own Time Sold Time Own Time Interval Sold Time Interval Time Distance Time Distance Distribution Outdoor Recreation Resources Review Commission xi INTRODUCTION The demand for outdoor recreation,1 i.e., the demand OR places upon scarce land, water, plants, animals and fresh air, has become a central characteristic of our age. Factors such as changes in leisure time, income, tastes, pOpulation growth, urbanization, mobility, trans- portation, congestion, pollution, etc., all lead us to expect an even greater demand for OR in the future,2 while the available supply of land, water and air must needs remain relatively fixed or will even diminish. On the other hand, the industrial-commercial and other demand placed on these natural resources will grow simultaneously. The question therefore arises of how society can best satisfy these conflicting demands. Were OR a good sold predominantly in the private market, the conflict would be resolved through the (money) price mechanism. But, for the most part, OR is consumed as a "public good,‘ being provided free (if we neglect nominal entrance charges to lOutdoor recreation henceforth abbreviated as OR. 2Projections to the Years 1976 and 2000: Economic growth, Population, Labor Force and Leisure, and Transporta- tion, A Report to the Outdoor Recreation Resources Review Commission, ORRRC Study Report 23 (Washington: U.S. Government Printing Office, 1962). OR areas) by state, local or Federal governments. With the market price system not operating, governments and courts are faced with the problem of finding alternative or sub— stituting signals of value which could guide the efficient and welfare—oriented allocation of natural resources,3 if the allocation decision is not to be left completely to the political process. Cost-benefit analysis is one such alternative device. While the costs of investment in OR are known, the measurement of the resulting benefits has so far presented grave problems (see Chapter II). Especially, we do not know very much about the direct or primary OR benefits, i.e., those benefits which accrue to the recreationists themselves:4 "One of the most urgent needs is for more 3According to the Policies, Standards, and Procedures in the Formulation, Evaluation and Review of Plans for Use and DevelOpment of Water and Related Land Resources, 87th Congress, Second Session, Senate Document 97 (Washington: U.S. Government Printing Office, 1962), land and water resources development planning should "insure the realiza- tion of the optimum degree of physical and economic efficiency" (p. iii) and the "well-being of all of the people shall be the overriding determinant in considering the best use of water and related land resources" (p. iv). cf. also: Federal Executive Branch Poligy Governing the Selection, Establishment, and Administration of National Recreation Areas, Recreation Advisory Council Circular No. 1 (Washington: U.S. Government Printing Office, 1963), P. 4. 4Primary OR benefits must be distinguished from secondary_OR benefits, which are increases "in the value Of goods and services which indirectly result from the project under conditions expected with the project as compared to those without the project" (Senate Document 97, op. cit., p. 9). Thus, secondary OR benefits are mainly increases in employment and income to the recreation industry resulting from the money expenditures of recreationists. knowledge about the direct benefit that individuals derive from OR."5 The issue is usually confused and made more difficult by calling these benefits "intangibles" as they, it is said, consist of social, spiritual, aesthetic, scenic, historical, health, educational . . . benefits, which cannot be measured as such in monetary terms. From an economic point of View, however, the worth or value of a good is not measured by listing and evaluating its various beneficial characteristics (every good, whether sold in the market or not, has characteristics which as such may be intangible: the carpet which is bought in the market, e.g., has aesthetic, warmth, acoustic, and other benefits, but the market price summarizes all these values, i.e., makes them tangible), but by what the individual is willing to give up to obtain it, its price. The good called OR, or the satisfactions which the recreationist attains through his presence on the OR area, is therefore in no way more or less intangible or tangible than any other good. What the recreationist is mainly giving up, in the absence of an appropriate money price, is his scarce time. It is the central argument of this dissertation, that there exists a time price system in addition to the customary money price system and that through this value of 5Outdoor Recreation for America, A Report to the President and to the Congress by the Outdoor Recreation Resources Review Commission (Washington: U.S. Government Printing Office, 1962), p. 184. time theory primary OR benefits can be measured in monetary terms. CHAPTER I THE SOLD TIME-OWN TIME CHOICE MODEL Before we review past attempts at measuring primary OR benefits, we will first introduce, for a better per- spective, the method by which we think (part of) these benefits can and should be measured, so that they can serve as a sound basis for making policy and management decisions on the development of recreational facilities for present and future needs. We can imagine the good (input) called OR to be a composite good, package or bundle of separate, yet inter- dependent goods like scenery, air, waterfalls, trees, lakes, mountains, etc., yielding an output in terms of hours of actual OR experience to the recreationist.6 Our contention is that the primary OR benefits of the area are just the value of this time of actual participation in 6We require here active participation in OR, i.e., actual presence of the recreationist at the OR site. The benefits which the OR area may yield for persons not actively participating will be considered later on as external economies. ——7 John H. Foster has also suggested to measure the :productivity" of outdoor recreation land in terms of "total annual patron time per acre.’ See J. H. Foster, "Measuring the Productivity of Land Used for Outdoor Recreation," Land Economics, XL, No. 2 (May, 1964), 224-227. OR,7 which (i.e., the time) is at the same time the price paid for the OR experience, if we neglect for a moment entrance fees to OR areas. In order to evaluate the price or value of OR time, we will make use of and develop further the familiar neoclassical labor-leisure model first advanced by Lionel Robbins8 and pictured in modified form in Figure 1. Along the horizontal axis we measure total personal time per period (OM, here equal to one year = 8760 hours) and along the vertical axis we measure Income (Y), which stands for all goods except time. Sold time (abbreviated as ST) is total personal time per period actually exchanged, spent or used in the market for the earning of money income (Y). Own time (OK) is defined as total personal time per period (OM) minus sold time (KM).9 7Primary OR benefits cannot only be created through actual participation in OR, but can also be destroyed, e.g., through the construction of a dam at an OR area. In the decision process of whether to build the dam or not, the estimated, prospective primary OR benefits, i.e., mainly the value of participation time which would be foregone, would take the place of the actual benefits. 8Lionel Robbins, "On the Elasticity of Demand for Income in Terms of Effort," Economica, X (June, 1930), 123-129. 9Own time as such cannot be considered as an "economic good prOper," for time is not useful and scarce as such, but only in connection with specific activities: "time is always 'time—for-something'" (Alfred E. Ott, "Der Zeitbegriff in der Wirtschaftstheorie," in Wirtschaftskreislauf und Wirtschaftswachstum, ed. by Erich Schneider (Tfibingen: J. C. B. Mohr, 1966), p- 138 (my translation). Thus, when we speak of own time, we egg-Iv .fl IL u V E S T 1t 3 m A (S 7 E S 1\\ I In 3 o F K ”(8760 hours’) T‘ME L own TIME(OT) SOLD TlMEGST) _V:_ TOTAL PERSONAL TIME Figure 1.--The sold time (ST) — own time (OT) model. IlIl represents the indifference curve of an individual, indicating the various combinations of (Y) and (OT) which are indifferent to the individual (cf. IV, 1. B,C) Pw his hourly wage rate and (E) the equilibrium situation, i.e., (KM) hours of sold time are exchanged for (EK) = (SO) units of income (Y) per annum. (OK) are the remaining own time (abbreviated as OT) hours available to our individual, including among others the OR hours. Let (FK) represent this portion of his own time hours which he spends as OR .time (e.g., vacation time). Then at the going wage rate are always implicitly concerned with specific forms of own time: leisure, cleaning time, shOpping time. It is misleading, but so far has been the custom, to equate own time with leisure and sold time with work or labor. Actually, only a fraction of own time, for example (FK), may really be called leisure, while the rest (OF) falls into categories which range from pure work not sold in the market, to cross—breeds between leisure and work: miscellaneous household activities, like do-it-yourself, etc. Evidence indicates that non-leisure-own time (OF) must on the average amount to a substantial portion of total own time (OK). The National Recreation Survey of the U.S. (National Recreation Survey, A Report to the Outdoor Recreation Resources Review Commission, ORRRC Study Report 19 (Washington: U.S. Government Printing Office, 1962], p. 361) estimates 1318 annual leisure hours per capita, which together with an annual estimate of 2000 hours of sold time (work), would still leave 5442 hours of the total annual 8760 hours (= 365 x 24) for (OF). Even if we were to add 2920 hours (= 365 x 8) of sleep-own time to the leisure time estimate, the (OF) part of 2522 hours would still not be negligible. In addition, sold time (KM) may include hours which only superficially can be called work: jobs, where people are paid also for the readiness to and presence at work. These and other difficulties are revealed as really unnecessary, when we adopt the more precise concepts of own time and sold time. The advantage of not defining non-sold time as leisure will become obvious especially in Chapter IV, 6. Pw, our individual is actually foregoing (RP) = (TS) units of (Y) in exchange for (PE) = (FK) hours of OR leisure, i.e., the income Opportunity cost of his total OR time amounts to (TS) of (Y) per year. Furthermore, should it be desired to induce our individual to work during his OR time (FK), we see that just paying him the going wage rate Pw would not suffice, for at R he is definitely worse off (i.e., on a lower indifference curve IRIR) than at E. To make him as well off as before would require payment of a premium of at least (RV) = (TU) dollars, or a higher wage rate for the additional (FK) hours of sold time supplied.10 We can say therefore, that the reason why the individual is actually ngt_working during his OR time, preferring the leisure time to work, is, because the income opportunity cost (RP), or the market price of (FK) hours of OR time, is smaller than the "real" value of (FK) to the individual, which is at least (PV) dollars. Thus, he enjoys an "OR-surplus" of (RV) dollars. In other words, the value of own time, the price of OR time in particular, is at least Pw per hour. 10Later on we will show the effect which a different distribution of the ST—OT intervals may have on the value of time. 10 By aggregating the OR hours11 over all individuals who have visited a particular OR area (park) during a year and multiplying by the respective wage rates (an average or minimum wage rate may be used), we then can estimate a money value or a portion of the primary OR benefit accruing to that OR site per year, if we consider entrance fees to be negligible.12 The primary OR benefit of planned but not 1According to Recreation Advisory Council Circular No. 6 (Federal Executive Policy Governing the Reporting of Recreation Use of Federal Recreation Areas, Recreation AdvIsory Council Circular No. 6 (Washington: U.S. Govern- ment Printing Office, 19651), Federal Agencies shall report OR use beginning 1965 in terms of "annual totals of visitor-days on the sites and areas which they administer" (p. 3). Visitor-days are defined as: "Twelve visitor-hours, which may be aggregated continuously, intermittently, or simultaneously by one or more persons" (p. 2). A visitor-hour is: "The presence of one or more persons on lands or waters, generally recognized as pro- viding outdoor recreation, for continuous, intermittent, or simultaneous periods of time aggregating 60 minutes" (p. 2). For examples of visitor—day statistics see Appendix C. 12Formally, the money time benefit (MTB) of an OR area (j), per year, is: 1’1 MTB. = Z P . x T.., 3 i :1 W1 13 .th . . where Pwi = hourly wage rate of the 1 recreation1st, Ti. = number of visitor—hours which the 1th recreationist spent at OR area (j) per year, and where there are i = l...n, recreationists per area and year. Tij measures only the actual time Spent by recreationist i at OR area j. It therefore excludes desired visitor-hours in excess of the actual hours, which could not be actualized because of fixed contractual ties. For example, if the weather should turn out to be too beautiful, I might be willing to forego my income for an 11 yet developed OR areas can be obtained by forecasting expected OR visitor hours and their money value per area and period. These forecasts will be a function of expected own time, wage rates and tastes, supply substitutes and other factors. ¥ afternoon, in order to be able to spend the time in OR. However, the rigid labor contract forb1ds this. One may therefore argue, that not the actual - visitor-hours, but the desired visitor-hours (the de51re being backed up by the willingness and ability to pay for it) should be measured by Tij’ for also these de51red visitor-hours express the valuation attributed to the OR area. As we can in practice only measure the actual OR hours and the desired OR hours probably are greater than the actual hours, MTB. underestimates the true (time) value of the OR area. CHAPTER II REVIEW OF MAJOR ATTEMPTS AT MEASURING PRIMARY OUTDOOR RECREATION BENEFITS* The problem of how to measure primary OR benefits arose first within the various agencies of the U.S. Federal Government, for benefit measures were needed for planning, project justification and cost allocation among the * Findings up to 1962 are already summarized in: Economic Studies of Outdoor Recreation, A Report to the ORRRC, ORRRC Study Report 24 (Washington: U.S. Government Printing Office, 1962). See also: Water for Recreation--Values and Opportunities, ORRRC Study Report 10 (1962), pp. 47-50. A further discussion of various methods of evaluation can be found in Marion Clawson and Jack L. Knetsch, Economics of Outdoor Recreation (Baltimore: John Hopkins Press, 1966), especially pp. 212-229. This review will therefore be limited to the summary of the essentials of the major methods. Cf. also Paul R. Kipp, Annotated Bibliography on the Economic Evaluation of Outdoor Recreation and Related Subjects, 1959. (Available at the Central Library, Department of the Interior, Washington, D.C., mimeograph.) 29 pp. William A. Dill, A Partial Bibliography on the Economic Evaluation of Sport Fishing and Fisheries Resources, FAQ Fisheries Circular No. 8 (Revision 1), . Prepared for European Inland Fisheries Advisory Comm1551on (EIFAC), Rome, March, 1964, 18 pp. ' , German "attempts" are summarized in Hartmut Jacob, "Zur Okonomik der Erholungsfunktion des Waldes," Allgemeine Egrst Zeitschrift (Mfinchen), 26. Jg., 17, (April 24, 1971), 348-351. A survey article is that of T. L. Burton and . Margaret N. Fulcher, "Measurement of Recreation Benefits-- A Survey," The Journal of Economic Studies, III, No. 2 (July, 1968), 35-48. 12 13 purposes served. It is therefore not at all surprising that these agencies also first attempted to evaluate these benefits. (1) The first most systematic study was undertaken by the National Park Service in 1947 in the form of an analysis of letters in which a list of consultants l3 replied to an inquiry of the National Park Service. The general conclusion of this report was unnecessary pessimistic: "recreational values cannot be measured in dollar terms other than on some arbitrary or judgment value basis" (p. 30), mainly because these values are intangible. One of the reply letters, written by Harold Hotelling at least saved the face of the study. Hotelling suggested: Let concentric zones be defined around each park so that the cost of travel to the park from all points in one of these zones is approximately constant. The persons entering the park in a year, or a suitably chosen sample of them, are to be listed according to the zone from which they come. The fact that they come means that the service of the park is at least worth the cost, and this cost can probably be estimated with fair accuracy. If we assume that the benefits are the same no matter what the distance, we have for those living near the park, a con-. sumers' surplus consisting of the differences in transportation costs. The comparison of the cost of coming from a zone with the number of peOple who do come from it, together With a 13Roy A. Prewitt, "The Economics of Public . Recreation--An Economic Study of the Monetary Evaluation of Recreation in the National Parks," U.S. Department of the Interior, National Park Service, Washington, D. C., 1949- (Mimeographed.) 14 count of the population of the zone, enables us to plot one point for each zone on a demand curve for the service of the park. By a judicious process of fitting it should be possible to get a good approximation to this demand curve to provide, through integration, a measure of the consumers' surplus resulting from the availability of the park. It is this consumers surplus (calculated by the above process with deduction for the cost of Operating the park) which measures the benefits to the public in the particular year I (Sect. II, p. 5 ff). While Hotelling's approach has been criticized mainly for his assumption of identical tastes or preferences of visitors from different zones,14 it at least provided a foundation upon which several followers could erect their modifications. We will mention here only those of Trice and Wood and M. Clawson.15 14In fact, the visitors from the most distant zone would set a "bulk-line value" of recreation and the con- sumer surplus which recreationists from nearer zones would enjoy, because they have to pay comparatively lower travel costs, would orient itself at the travel costs of the most distant user. 15Other modifications are those of N. W. Mansfield, "The Estimation of Benefits from Recreational Sites and the Provision of a New Recreation Facility," Regional Studies, V, No. 2 (July, 1971) 55-69; Peter H. Pearse, . ”A New Approach to the Evaluation of Non—Priced Recreational Resources," Land Economics, XLIV, No. 1 (February, 1968), 87-99; Leonard Merewitz, "Recreational Benefits of Water Resource Development," Water Resources Research, II, No. 4 (Fourth Quarter, 1966), 625-640; E. Boyd Wennergren, "Valuing Non-Market Priced Recreational Resources; Land Economics, XL, No. 3 (August, 1964), 303-314 and Surrogate Pricing of Outdoor Recreation," Land Economics, XLIII, NO- 1 (February, 1967); and William G. Brown, Ajmer Singh, and Emery N. Castle, An Economic Evaluation of the Oregon Salmon and Steelhead Sport Fishery, Technical Bulletin 78 (Corvallis: Agricultural Experiment Station, Oregon State University, 1964), 47 PP- 15 Trice and Wood16 make use of Hotelling's travel cost method in an empirical application. For three areas in the Sierra Nevada the following sample information was available: 1. Number of persons in each recreational party. 2. The city or county of origin of each party. 3. The number of days spent by each party in the area of recreation. 4. The number of days the party spent on its entire recreation trip. By use of the four items of specific information secured from each recreational party, there was computed for each of them an average cost of travel per visitor day (p. 204). [A travel rate of 6.5 cents per mile was used.) As it was not known whether the trips were single purpose or multiple purpose trips, i.e., whether other areas were visited along the trip to the subject area, it was assumed That a proper charge of travel cost to the area under study is the percentage of the total round trip Spent in the recreational area. For example, if four peOple on a fourteen—day vacation trip, spent seven days in the area, fifty percent of the computed round trip cost would be divided by the total number of person days in the trip (28), to obtain the per visitor day cost of travel (p. 204). The total travel cost per visitor day is then plotted against the number of visitor days, which yields a kind of a downward SIOping demand curve. Trice and Wood establish a bulk—line market value at the 90th percentile and sub— tract from it the median travel cost to obtain a "free benefit" or consumer surplus of approximately $2.0 per visitor day. Trice and Wood admit their "rather broad 6Andrew H. Trice and Samuel E. Wood, "Measurement of Recreation Benefits," Land Economics, XXXIV (August, 1958), 195-207. 16 assumption as to the sameness or homogeneity of the members of the group under study" (p. 206), an assumption which is . . . . . 17 18 cr1t1Cized in a reply by L. G. Hines. A. Scott maintains that the Trice-Wood method is actually a short-cut, avoiding the working out of a full demand curve. Its disadvantages are not only that it searches for the irrelevant consumer's surplus, but also that it is highly sensitive to essentially arbitrary decisions made by the researcher (p. 37). M. Clawson,19 while building upon the basic Hotelling idea, gets around the identity of preferences assumption. He begins by plotting a demand curve for the whole recreation experience, showing total monetary cost per visit to four National Parks on the vertical axis and thousand visits per 100,000 population on the horizontal axis, "for groups of California counties and for groups of states, in each case within rather well—defined distance zones from the park" (p. 16). The total cost per visit is "estimated at average cost of $9.00 per day Lawrence G. Hines, "Measurement of Recreation Benefits: A Reply," Land Economics, XXXIV (November, 1958), 367. 18Anthony Scott, "The Valuation of Game Resources: Some Theoretical Aspects," Canadian Fisheries Reports, No. 4 (Ottawa: Department of Fisheries of Canada, May, 1965), pp. 27-47. 9Marion Clawson, Methods of Measuring the Demand fpr and Value of Outdoor Recreation, Resources for the Future, Inc., Reprint No. 10 (Washington, February, 1959). 17 (reported cost, minus transportation $8.47); plus 10 cents per mile for car for double one-way distance, divided by four on assumption of four passengers per car (p. 17, Table l, fn. 5). The number of days or the estimated time required to complete a visit is ”estimated on basis of 1 day per 400 miles of travel plus 1 day in park" (p. 17, Table l, fn. 4). Thus, this method assumes that "money, time, and distance are highly correlated" (p. 16). Clawson then proceeds to plot a second kind of demand curve, that for the recreation site per se, which he derives (extrapolates) from the demand curve for the total recreation experience. On the vertical axis of this new demand curve are shown increases in entrance fees and on the horizontal axis thousand visits. He contends "that this approximates the true demand curve for the recreation opportunity itself. It shows the relationship between price per unit and the number of units, all other factors remaining unchanged" (p. 26). In a later study,20 M. Claswon together with J. L. Knetsch, among other things, refine the method of esti- mating total costs per visit, by intuitively taking account of the fact that the trip to the parks may be multiple in nature. Thus the estimated cost per visit is shown OClawson and Knetsch, Economics of Outdoor Recreation. 18 a. as a full—cost figure "based on the assumption that the trip was made for the sole purpose of visiting Yosemite," and b. as a shared—cost figure "based on the assumption that the trip was made for more than this purpose; it therefore includes all the direct costs of the side trip to Yosemite but only part of the costs of the main trip" (pp. 72-73). For trips of less than 500 miles the whole cost of the trip is charged to Yosemite; the shared cost is therefore the same as the full cost of these trips. On the assumption that trips of more than 500 miles were undertaken only in part to visit Yosemite, costs of trip were charged 80 per cent to Yosemite for BOO-1,000 mile trips, 60 per cent for l,000-1,500 miles, 50 per cent for 1,500- 2,000 miles, 40 per cent for 2,000-2,500 miles, and 33 per cent for 2,500 and more miles (Table 7, p. 74, fn. 6). The total (gross) primary user benefit from the recreation area is measured as "the sum of the maximum prices which various users would pay for the various units of output from the area or project. This is equivalent to the total area under the demand curve" (p. 217) for the recreation site per se. For example, the total annual (primary) OR benefit for John H. Kerr Reservoir (a Corps of Engineers hydropower and flood control project on the Virginia- North Carolina border), "for the July 1, l963-June 30, 1964 year, was about $1.6 million" (p. 221), and for the Lewis and Clark Lake in South Dakota ("a large reservoir 'created on the Missouri River by the Gavins Point Dam"; p. 64), the benefit measure was approximately $1.4 million. 19 The authors recognize that "owing to the incomplete accounting of the effects of time,21 of intervening opportunities, and other constraints to visits in addition to money cost, these benefit estimates also have a down— ward bias" (p. 221). The above travel cost method has been adopted by the U.S. Water Resources Council22 in 1970 as one possible approach of measuring primary OR benefits for water and related land resources: Using marginal travel costs (i.e., variable costs of automobile operation directly related to the number of miles driven) taken as a measure of what people are willing to pay for water—oriented recreation and how price affects use, the relation- ship between price and per capita attendance can be established for recreation sites and market areas. This relationship, the conventional demand curve having a negative slope, sums up the response of users' demand to alternative prices of the recreational product (or experience). . . . [I]nitial project year day-use and camping-use 21Anthony Scott, Op. cit., adjusts the demand curve for the Opportunity cost of travel time. For another correction of this bias see Frank J. Cesario and Jack L. Knetsch, "Time Bias in Recreation Benefit Estimates," Water Resources Research, VI, No. 3 (June, 1970), 700-704. 22The Water Resources Council is composed of the Secretary of the Interior, the Secretary of Agriculture, the Secretary of the Army, the Secretary of Health, Education, and Welfare, and the Chairman of the Federal Power Commission. It coordinates planning of water and related land resources, conducts, reviews and approves studies and makes recommendations. cf. The Water Resources Planning Act, Public Law 89-80, 89th Congress, S. 21, July 22, 1965. ‘1: 2» arm-rm, 20 benefits are computed by measuring the area under their respective demand curves.23 How is the above method related to our time price method? First of all, it should be emphasized that the travel cost method does not represent an alternative to our time price method but that it is supplementary to it, i.e., it is a possible (proxy) or indirect method of measuring the money price portion of the total price of OR, for the total price (benefit) is composed of the time price (PT) and a money price (PM), where we provide a measure of the former. Secon dly, as was already stated earlier, distance traveled and time (length of stay at an OR site and travel time) are positively correlated, i.e., there is a tendency for the length of stay (the time spent at an OR area) to be greater, the longer the distance traveled to the area, cet. par.24 Travel costs (prices) and time costs (prices) tend therefore also to be correlated. (2) The "Standards" established by the Water Resources Council provide for another approach (besides the travel cost method already mentioned) to the measure— ment of OR benefits. It suggests daily unit values, which 23Standards for Planning Water and Related Land Resources, Report to the Water Resources Council by the Special Task Force (Washington, D.C.: Water Resources Council, July, 1970), III-B-2-15. 24Cf. Chapter V, 2; cf. also A. Scott, op. cit., p. 35. 21 are simulated prices per recreation day net of associated costs. This method is now in actual use in federal water resources planning on an interim basis and was originally published in Senate Document No. 9725 and its Supplement 26 . . . No. l which was an off1c1al "recognition and full con- sideration of outdoor recreation as a primary purpose in water resource development project formulation and evaluation."27 According to the 1970 "Standards," the range of unit day values depends upon the type of outdoor recrea- tion day: a. A General Outdoor Recreation Day, which has a range of unit day values of $0.75-S2.25 is "a recreation day involving primarily those activities attractive to the majority of outdoor recreationists and which generally require the development and maintenance of convenient access and adequate facilities" (III-B-2-l7), 25Op. cit. 26Evaluation Standards for Primary Outdoor Recreation Benefits, Supplement No. 1 (Washington, D.C.: Ad Hoc Water Resources Council, June 4, 1964), 9 pp. 27Jack L. Knetsch, Economics of Including Recreation as a Purpose of Water Resources Projects, Reprint No. 50 (Washington, D.C.: Resources for the Future, Inc., January, 1965), p. 1148. -—¢—-~ _. 1 - 1.1 7 22 b. A Specialized Outdoor Recreation Day, which has a range of unit day values of $2.50-S7.00 is "a recreation day involving those activities for which opportunities, in general, are limited, intensity of use is low, and often may involve a large personal expense by the user" (III-B-2-l7). The unit day values "reflect the consensus judgement of qualified technicians” and are "intended to measure the amount that the users should be willing to pay, if such 28 payment were required." They "represent an expansion of I [a] schedule of values for fishing and hunting to all forms of outdoor recreation associated with water develop— ment projects."29 These values for fishing and hunting were obtained from National Surveys of Fishing and Hunting "in the form of sportmens' expenditures . . . together with similar expenditure information from other federal . "30 and state expenditure surveys. As finally developed, the schedule of values for the various types of fishing and hunting was believed to represent a first approximation of the net amount that a hypothetical private. Operator could realize from providing fishing and hunting on a federal reservoir prOject.3l 8Supplement No. l, o . cit., p. 5. 29William M. White, "Evaluation of Recreation in Water DevelOpments," Journal of the Power Div131on, Pro- ceedings of the American Society of C1v1l Engineers (May, 1965), 7. 3OIbid. 31Ibid.; William M. White, "The Economics of Sport Fisheries Management," Canadian Fisheries Reports, NO. 4 (Ottawa: Department of Fisheries Of Canada, May, 1965), pp. 73-78. 23 This method is thus a particular application of ' what is called the market value method which imputes 32 private prices to comparable public OR areas. The above method can be critized mainly because: a. Using charges at private OR areas for the measurement of benefits at public OR areas imposes a downward bias on these benefits, as the almost free supply of public areas competes with and depresses the price which can be charged at private areas. b. "The charges that users are willing to pay at private areas may largely reflect payments for benefits in excess of those available at public areas-- better management, less crowding, for example. It is precisely because private areas are not fully comparable with public areas that users are willing to pay fees or charges."33 32See: R. A. Spargo, "Methods and Techniques of Evaluation of Sport Fishing," Canadian Fisheries Repprts, No. 4 (Ottawa: Department of Fisheries of Canada, May, 1965), 53-69. Ruth P. Mack and Sumner Myers, “Outdoor Recreation," in Measuring Benefits of Government Invest- ments, ed. by Robert Dorfman (Washington, D.C.: The Brookings Institution, 1965), pp. 71-101, espec. pp. 82ff. Proposed Practices for Economic Analysis of River Basin Projects, Report to the Inter-Agency Committee on Water Resources (“Green Book“), Prepared by the Sub- committee on Evaluation Standards (Washington, D.C.: U.S. Government Printing Office, May, 1958), pp. 43—44. 33 Clawson and Knetsch, op. cit., p. 227. 24 c. A further bias is introduced through the fact that the number of recreation days at public areas are measured at a nominal or zero charge. "The number at a zero charge will be considerably larger than the number at the entrance fee which would maximize revenue. Multiplying the value per visit by the number of visitors at a zero charge will therefore result in an overestimate, perhaps a serious one, of the benefits or values pro- duced."34 (3) Closely linked with the two previous evalua- , tion methods is the so-called gross expenditure method.33 "This method attempts to measure the value of recreation to the recreationist in terms of the total amount spent on recreation by the recreationist,"36 for such items as food, lodging, transportation, recreation equipment, etc. Obviously, this method, while popular, must be subjected to severe criticism: a. "Many so-called recreational expenditures are normal expenditures"37 which would have been made also in the absence of OR. A substantial portion Of food and travel expenditures belong to this category. Thus it —. 34Ibid. 35See Trice and Wood, Op. cit., pp. l98ff. 36Clawson and Knetsch, op. cit.. p. 224. 37Trice and Wood, Op. cit., pp. 199-200. 25 cannot be said that these expenditures were in any sense "new or additional" in order that they could be attributed solely to the OR experience to measure the "worth" Of the latter. b. "Even those expenditures which are over and above normal living costs are not necessarily measures of recreational enjoyment, but are the price paid for certain goods and services (in connection with the OR experience)38 for which there are established market values. Dollars spent in pursuit of recreation appear to be more significant as indicators of secondary benefits to the business community than as measures of primary u39 recreational benefits. (4) Cost Method. This method "assumes that the value of outdoor recreation resource use is equal to the cost of generating it or, in some extreme applications, to a multiple of that cost."40 While there may be a tendency for benefits, measured in terms of visitor hours spent at OR areas, to be greater, the greater the cost of developing these areas, nothing can be "gained by assuming a constant 38My insertion. 39Trice and Wood, Op. cit., p. 200; cf. also Spargo, Op. cit., p. 59). OClawson and Knetsch, op. cit., pp. 225-226. 26 relationship between benefits and costs." It involves circular reasoning: Obviously, the reason for estimating benefits in the first place is to decide economic feasibility or, in other words, whether costs should be incurred at all. TO assume that benefits are equal to or twice as great as costs in every case is to make all recrea- tional projects feasible. In addition, if the ratio of benefits to costs are equal for every project, there is no [real]41 basis for establishing priorities among projects,42 3 and justification of projects will be left to "intangible considerations." Furthermore "this method offers no guide to evaluating a contemplated loss of recreation Opportunities, and it allows very little discrimination between the relative values of alternative investment Opportunities."43 (5) A more refined method of using costs for the measurement of primary OR benefits is the alternatives method. Benefits are here 'established on the basis of the difference between the cost of production by one means and the cost of production by the next alternative means of production."44 41My insertion. 42Trice and Wood, op. cit., p. 201. 3Clawson and Knetsch, op. cit., p. 226. 4Spargo, op. cit., p. 63. 27 A variant of this method can be applied to computing OR benefits of fishermen: If in fishing the alternative [river, e.g.]45 higher costs are incurred (such as having to travel farther), then this represents an additional cost to the sportsman. The saving of this additional cost represents the primary benefits to the fisherman from having the river he tends to fish in existence."46 A problem will here consist in finding comparable alternatives (which may be difficult for unique areas like, e.g., Grand Canyon) and of selecting the one most apprOpriate for the area under consideration. In Germany, H. Papst47 has computed for a forest near Freiburg, its outdoor recreational value in terms of cost savings which would result, if the forest would not be converted to other (non-recreational) uses. The cost savings, through preservation of the forest, includes "the near city location, number and frequency of recreationists and costs for alternative recreation" (p. 163). Papst analyses and compares the costs of three possible OR-alternatives (to the forest in existence): 4 . . 5My insertion. 46Cf. Edward L. Ullman and Donald J. Volk, "An Operational Model for Predicting Reservoir Attendance and Benefits: Implications of a Location Approach to Water Recreation," Papers: Michigan Academy of Science, Arts gpd Letters, XLVII (1961), Ann Arbor, 1962. 47H. Papst, "Zur Bewertung der Sozialfunktion des Waldes in Stadtnahe," Allgemeine Forst-und Jagdzeitung, 140.Jg., Heft 7 (July, 19695, pp. 158-163. fixth'w—‘i 1" I“. i “I... 28 1. Alternative recreational facilities are not supplied, the town people have to divert to other more distant areas at their own expense. 2. The loss of the forest area is compen— sated by the establishment of town—area parks at public expense. 3. The forest is preserved and converted into a woodland park at public expense (p. 163). (6) Direct Interview Method. This method simulates demand curves for OR areas through direct interviewing of recreationists concerning their willingness to pay "for the services of the land and water areas used." Willingness to pay of a sample of users was determined in an interview which included, among other things, a bidding "game" in which respondents could react positively, negatively or indifferently to increased costs of visiting the area. Bids were systematically raised (or lowered) until the user switched his reaction from inclusion to exclusion (or vice versa). There are obvious problems of bias in stating reactions to hypothetical purchases, but this may be reduced with skillful interviewing. There are also disadvantages from the stand- point Of generalizing the results to wider and proposed new areas, and costs of obtaining the needed information are high.4 (7) Although it would certainly not represent a very popular method, the most direct way to measure ‘ 48Robert K. Davis, "The Value of Outdoor Recreation: An Economic Study of the Main Woods" (unpublished Ph.D. dissertation, Harvard University, 1963), Summary, p. 1. 49Clawson and Knetsch, op. cit., p. 228; cf. Spargo, Op. cit., p. 62; and Mack and Myers, op. cit., pp. 85ff. 29 primary OR benefits or willingness to pay, would be to leave all the indirect methods discussed so far aside and impose actual fees or tolls. A. Scott shows "that a value for the resource could be Obtained, mechanically, by estimating the maximum present value of net returns that could be gained by the imposition of a hypothetical toll."SO Warren C. Robinson suggests that recreation services be priced at marginal costs.51 The Land and Water Conservation Fund Act of 1965 (78 Stat., 897), which encourages and permits user or admission fees to federal recreation areas under various conditions, goes a modest step in this direction.52 50A. Scott, op. cit., p. 43. 1Warren C. Robinson, "The Simple Economics of Public Outdoor Recreation," Land Economics, XLIII, No. 1 (February, 1967), 71-83. David W. Seckler proposes that demand curves for OR be corrected for the effects of unequal income distributions, otherwise the imposition of fees would ration OR areas not in an "income neutral" way, i.e., the rationing would be in favor of the "comparatively well-off." David W. Seckler, "On the Uses and Abuses Of Economic Science in Evaluating Public Outdoor Recreation," Land Economics, XLII, No. 4 (November, 1966), 485-494. 52Cf. U.S. Congress, House, Subcommittee on Rivers and Harbors and the Subcommittee on Flood Control of the Committee on Public Works, Hearings, Entrance, Admission, and User Fees at Corps of Engineers Projects, 89th Cong., 2nd Sess., 1966, H.R. 13313 and related bills (Washington, D.C.: U.S. Government Printing Office). U.S. Congress, Senate, Committee on Interior and Insular Affairs, Hearing, Land and Water Conservation Fund, 88th Cong., 2nd Sess., 1964, H.R. 3846 (Washington, D.C.: U.S. Government Printing Office). 3O (8) R. P. Mack and S. Myers "find that benefits need to be measured in terms of a merit-weighted service unit: merit-weighted user-days of outdoor recreation,"53 “I whereby merit' rests in the utility measured along a social welfare function" (p. 89). The utility of a user-day of recreation differs, of course, depending on what sort of recreation is used by whom. These differences are taken into account in the weighting system whereby various sorts of recreation for various sorts of people under varying conditions of supply are con— verted to merit—weighted user-days. The weights imply the formulation of criteria for prOper performance of government's function with respect to the provision of the service. The political process as well as explicit judgments are viewed as contributing to the formulation of the criteria (p. 72). The criteria fall in several groups: Public- private relationships; quality standards; balance among the kinds of recreation that are provided; distributive justice among present members of the community; justice with respect to present and future members (p. 90). U.S. Congress, Senate, Report No. 1364, Calendar No. 1300, Land and Water Conservation Fund Act, 88th Cong., 2nd Sess., 1964. U.S. Congress, House, Committee on Public Works, Briefing on H.R. 5269, The Federal Water Project Recreation Act, 89th Cong., 1st Sess., 1965 (Washington, D.C.: U.S. Government Printing Office). U.S. Congress, Federal Water Project Recreation App, Public Law 89-72, 89th Cong., S. 1229, July 9, 1965. For a discussion of the pro and cons of OR pricing, cf. Clawson and Knetsch, Op. cit., pp. 272ff. and pp. 3l3ff . 53My emphasis; Mack and Myers, op. cit., p. 71. .3 1 Among these criteria, distributive justice (need) and gross geographic equity (supply excess or deficiencies; proximity) are especially emphasized. While this procedure may be useful in that it provides "a check list and some quantitative orders Of magnitude of benefits and costs" (p. 100), in our opinion, it seems to be too arbitrary in its reliance upon the judgment of some OR—merit—evaluator. Although performance criteria may indicate that one park has greater merit than an alternative park, on what basis should one decide by how much actual or estimated user-days are to be adjusted, so that the merit-weighted level of service can be computed? Rather than having the merit-evaluator decide for the community what is good for them, it is more deSirable to take explicit account Of the actual demand in terms of time- and money-prices, which have the further advantage in that they can be compared with dollar benefits of other purposes of land use, while not all other pruposes and their respective benefits can be measured in merit-user days. For analytic completeness it should be mentioned that the above method could be combined with our time price method, if the newly available figures of visitor- days per annum would take the place of user-days and if the corresponding merit—weighted visitor-days (hours) '3! 32 would be weighted with the respective wage rates to yield dollar figures of primary OR benefits. (9) There have been attempts to derive OR benefits from the increased market value of private property close to OR areas.54 In this connection, we suggest that a portion of the aesthetic—scenic yield of the total primary OR benefit can be estimated empirically through the following 3133? method: Hotel-room prices are often differentiated according to "views,' i.e., prices of rooms of equal comfort, size, etc. vary with the quality of their window exposures to the outside (lake vs. backyard exposure, i.e., scenery vs. no scenery). There thus exists a definite price for a ”view per dayN (PX), which can be computed by subtracting the price of the room without the view (PO) from the price Of the room with the View (Pm), cet. par., assuming that (PX) is not a price for prestige. By multiplying (PX) with the number of average "visitor-days" per year (D§) of a particular site, we can get through imputation an estimate of the annual scenic 54See Elizabeth L. David, "Lakeshore Property Values: A Guide to Public Investment in Recreation," Water Resources Research, IV, No. 4 (August, 1968). M. Prodan, WZur Bewertung der Sozialfunktion des Waldes in Stadtnahe," Allgemeine Forst- und Jagdzeitung, 6 (1968), pp. 131-138. Clawson and Knetsch, op. cit., pp. 222—223. 33 yield or benefit of this site. Empirically, (PX) can be approximated through a sample of hotels and their room prices, for which the cet. par.assumptions hold. An average for (PX) from the various price differentials could then be computed. (10) Recently, Erwin Hartsch55 has proposed a method which shows some similarity to our own. He measures the value of an hour of leisure (F) as follows: NE F - m, where NE = National Income, Z = average leisure time in hours per year and per worker in "material production," B = number of workers in "material production." Hartsch assumes that the value of physical and psychic energy reproduced during leisure time is at least as great as the value produced during the time of produc- tion, which we can measure in National Income. The recreation potential of an OR area (WE)' measured in money units, according to Hartsch, is: W = X Z x T x K x dF, where mn 5Erwin Hartsch, "Versuch zur Bestimmung des Okonomischen Wertes von Erholungsgebieten," Wissenschaft- 1iche Zeitschrift der Technischen Universitat Dresden, l9, Heft 2 (1970), pp. 499-501 (Editor: TU Dresden, East-Germany.) 34 T = the sum of OR hours Spent in the OR area, K = capacity of the OR area (in hours), m = the different kinds of OR (e.g., walking, swimming, etc.), n = the different social groups (e.g., age, profession, etc.). Hartsch then subtracts social and individual costs per area (AE) from (WE), to find (NE), the (net) benefit of the OR area, i.e., While Hartsch derives his leisure value (F) as an average for the whole economy, our opportunity cost value (PW) is a micro-value. (F) would correspond to our value (PW), if Z would be substituted through our (ST), Which would yield an average wage for the whole economy. However, as normally ST < OT per year (OT corresponding to Z), (F) has a downward bias, which can also be shown in Figure 1 through the difference in slope between (PW) and the line (SK), i.e., (SK) being flatter than (PW) as OT > ST. Only in the rare case when ST = OT, would the value (P ) and (F) coincide. When ST > OT, W (F) > (PW). The above downward bias of (F) is further rein- forced through the fact (as we will show later on), that (PW) underestimates the true value of OT per hour, because 35 there exists above (P ): (a) an own time surplus, and W (b) a direct price of own time. To conclude, most of the methods mentioned in this chapter, in so far as they try to provide money measures of the willingness to pay for OR, may serve as possible measures of the pure money price side of the total primary OR benefits per area or acre. They are, however, all56 deficient in that they neglect to measure the actual time price paid by recreationists, which is the second component of any figure of total primary OR benefits. We propose a method of quantifying this second element. 56With the exception of the Hartsch proposal and the modification of the travel-cost method, proposed by A. Scott, 0 . cit., which takes account of the Oppor- tunity cost of time in the estimation of the elastic1ty Of demand. CHAPTER 111 TIME AND ECONOMICS The role of time in economic theory can be condensed into three different "sets of problems:"57 a Time as the Economic Period; b. Time as an Economic Good; c. Time as Velocity of Adjustment. We will here be concerned with time in its second "role." In particular, the role of time in its "money" function as a measuring rod of value and as an Object of valuation—-apart from and in addition to the role which time has already played in the "Labor Theory of Value," Queuing Theory and in the Economics of Transportation--will be of interest. 'With increasing economic development there is reason to predict economics to become relatively more concerned with time (prices) and relatively less with money (prices). The more economies grow toward a level 57This distinction is adopted from P. N. Rosenstein-Rodan, "The Role of Time in Economic Theory," Economica (February, 1934), pp. 77-97. Paul Bernhard Wittenburg, "Wirtschaft und Zeit," (Eine Untersuchung fiber den Begriff der Okonomischen Zeit), Hpidelberger Studien, ed. by Arthur Salz (Institut fur Sozial-und Staatswissenschaften), II, Heft 6 (Heidelberg: Verlag der Weiss'schen Universitatsbuchhandlung, 1932), who classifies the various uses and meanings of the time concept found in economic theory, distinguishes seven meanings. 36 37 of material abundance ("guaranteed income," etc.), the less we have to be concerned about material scarcities and the more our attention will be focused upon the ultimately scarcest of all goods: "human time." (1) Time Scarcity The scarcity of human time58 is of a fourfold nature: a. The time of human existence is not a free good, but must be "produced" through the consumption of other scarce resources. In the beginning, money (goods) was (made) time, and only after that, time was money.59 This we call the pgoduction-cost scarcity of time. b. The production of time is restricted by a law of nature to certain "quotas" or rations, i.e., no more or less than one day, hour, week, etc., can be produced per person at a time, during one day, hour, week, etc., respectively. Time occurs only successively and not "simultaneously." Only on the macro scale of a group, nation of individuals (population) may we speak, for instance, about a production of 180 million human days per day. 58Relative to human wants--hence the necessity to economize it.. 59C of Time. f. Appendix A: The Theory of the Production 38 Because we consume our time as soon as we produce it, i.e., consumption and production of time occur simultaneously, time can never be saved or stored in the sense we save and store other goods (money). This leads us to derive the time-satiation-impossibility- law, which says that we can never be satiated with time ' (except when we are bored), because we can never have enough time (at a time). Time is always scarce and distant: the next day can be had only tomorrow and not now. Needless to say, that the above holds true only under the assumption that time is desirable in the first place. And time will be desirable only as long as we desire goods, are involved in projects, whose still "outstanding" fulfillment and satiation (completion) in turn implies that we are separated from them by finite or infinite (God; the "infinite" landscape) time distances (cf. Chapter IV, 5). Ultimately, time is therefore scarce and will be valued only because we desire to live60 and we desire to live because we are always and perpetually continuing to be distant from where, how and 60If we don't desire to live, when the utility of lifetime is zero or negative, we either commit suicide, or if the own cost and the cost to others of taking the lifetime exit (suicide) is too great, we may continue to live at the level of despair or absurdity. These aspects I have further developed in an unpublished paper: "A Theory of Projects: Its Application to Death and Suicide," May, 1966. 39 what we would like to be.61 The latter "distance" in turn is the result of our incapacity to consume all goods and to do all things simultaneously and instantly and our inability to produce more time at a time. The circulus vitiosus is closed.62 "Being" and the objective "time constraint" are tangential. This time scarcity would exist even in a hypo- thetical state of unlimited lifetime. It is reinforced through our limited human capacity to consume goods and to do things simultaneously, which necessitates the choice of present vs. future consumption, i.e., the choice of H232 to consume (do) 323: and how much. c. On the demand side, we can observe a tendency for an increasing scarcity of time. Here, scarcity is caused, as is stressed by Linder,63 through economic growth; for consumption of an increasing amount of goods increases the competition for the fixed amount of time per period: it takes time to consume goods in addition to money. __ 61This is not to deny that there may exist "desireless" times in human lives, when the human soul is at peace and rest. 2Every man alive must be engaged in some project(s). Even the "Absurd Man" as portrayed by A. Camus in the "Myth of Sisyphus," affirms his project of pushing the rock or of writing essays and even the despairing man may find in suicide his last, although futile, project. 63Staffan B. Linder, Das Linder Axiom Oder Warum gig keine Zeit mehr haben (Gfitersloh-Wien: Bertelsmann Sachbuchverlag, 1971). 40 d. There exists a force beyond human control yet: death, which sets an ultimate upper limit (budget) to all individual time production; a transcending force through which all intermediate time units (budgets) attain an additional and increasing sense of scarcity. We can therefore view time budgets in a short run and a long run sense: a long run (lifetime) budget of uncertain size, which in turn is made up of short run sub-budgets. The short run budgets of an hour, day, week, month or year are scarce already because of the first three reasons, but this time scarcity is reinforced through the final horizon of the long run lifetime budget which is continuously "eaten up,‘ or approached by the short run time budgets.64 Every new short run time budget brings us a step closer to the point where nothing of the long run budget--whose uncertain65 size can only 64The size of the long run lifetime budget may depend upon the wgy we spend our short run budgets, cet. p33. At the extreme, if the short run budget allocaEiOn for an individual's leisure existence-minimum (IL in Appendix A) does continuously not occur, the long run budget will soon approach. But the closer the long run budget horizon, the higher will be the scarcity of lifetime, and the higher will, cet. par., be the value Of allocating short run budgets as a leisure existence-minimum. This is the economic explanation for the "natural" tendency of man to preserve his life. The person who has faced death, whether in sickness, accident or contemplated suicide, will consider life more precious. Life's built-in scarcity mechanism can be life-preserving. 65The fact that the lifetime budget is uncertain, in itself enhances the scarcity and value of present short run time budgets. Even if lifetime were infinite with a 99% probability, the remaining death possibility of 1% 41 be estimated according to the laws of probability-- remains. This third aspect thus yields a Law of the Increasing Scarcity of Time, with increasing lifetime (age or imprisoned time),66 i.e., through living, the would suffice to make time scarce. Not knowing with certainty (but probability only) whether we will be alive the next hour, day or year, it is more secure and less risky to treasure and prefer present over future thought and action, unless one is a risk-preferer. This also supports the Austrian time preference theory. 66 In the words of the philosopher Arthur Schopenhauer: "As long as we are young, whatever we are told, we look upon life as being endless and we treat time accordingly. The older we become, the more we economize (use sparingly) our time." (Arthur Schopenhauer, Aphorismen zur Lebensweisheit, Goldmanns Gelbe Taschenbficher, Mfinchen, 1960, p. 207; my translation). The increasing frequency of death anxiety with old age can be said to be a positive functionPOf this increasing scarcity of time, although it may not necessarily be death himself that is feared, but the waste of ones lifetime--a heightened recognition of the "inefficient" allocation of human time and resources. (Cf. Herman Feifel, "Death-Relevant Variable in Psychology." Ch. 3 in Existential Psychology, ed. by Rollo May [New York: Random House Studies in Psychology, 1961], pp. 72-73). Furthermore, the huge suns of money which are sometimes invested in hopeless cases of illness, only in order to extend lifetime for relative short periods, are evidence of the heightened preciousness of scarce time once the long run time budget horizon is near. In these cases we would be truly justified in saying that: Money is Time. Whether the same sums of money would have been invested in human lifetime (health) when the death horizon was still far away, may be doubted. According to an old German saying: During the first half of our life we sacrifice our health in order to earn money; during the second half of our life, we sacrifice our money to regain our health. In the meantime, life and health fade away. This latter form of human myopia--a myopia of future time scarcity--when one thinks to have plenty of it,may be very costly indeed: the cost of prevention 42 remaining lifetime budget is continuously dwindling, becomes scarcer: life is a journey towards death. Whether there exists also a Law of the Increasing Marginal Utility of Time with increasing age, will depend upon the inherent utility of additional lifetime units. There is a tendency-~which however is not a necessary one-- for activities, experiences, etc., to become increasingly repetitive and monotone (satiated) with increasing life— time, a tendency therefore for a diminishing marginal valuation of time which might reduce, balance or outweigh .the increased value placed upon additional time resulting from its heightened scarcity. usually would be less than the cost of cure and the opportunity cost of no cure, i.e., premature death (cf. Burton A. Weisbrod, Economics of Public Health, (Philadelphia: University of Pennsylvania Press, 1961]). Government legislation and health programs (work- hour legislation and health programs (work-hour legisla- tion, vaccinations, free physical checks, etc.) may partially correct some of this myopia. (Cf. Ludwig Schnorr von Carolsfeld, ”Arbeitszeit und kollektiver Arbeitsvertrag," in Arbeitszeit und Freizeit; NUmberger Hochschulwoche, Februar, 1961, Nfifnberger Abhandlunger zu den Wirtschaft- und Sozialwissenschaften, Heft 15; Duncker und Humboldt, Berlin, pp. 149-160). Later on, we will see that the investment of time and money in OR may be an indirect way of preventing ill health. Moreover, the costly attempts of life extension or preservation through medical research ("Human Hiberna- tion"; sleep substitution, etc.) illustrate man's dis- satisfaction with the length Of his conscious and unconscious lifespan. From the economic point of View, the tremendous waste of human capital which occurs every time a human person dies, that huge store and creator of knowledge which decays before our eyes--while at the same time a great part of the investment in education of a new generation must try to replace just this knowledge which thus has vanished——may be the greatest conceivable waste. 43 Hermann Friedmann67 has also observed this antinomy of the two tendencies: The "lifetime-good" manifests two characteristics which are seemingly antinomous. With each act of consumption it tends towards an infinitely great "satiation," on the other hand, the value of the continuously decreasing liferest is continuously growing and becomes infinitely great at the moment of death (p. 371). Friedman (p. 371) summarizes the latter tendency--which we have called the Law of the Increasing Scarcity of Time-— in the form of the following equation: in which "(t) stands for some instant (point of time) during a lifetime whose end occurs at a later instant (T)," and (x) represents the ordinal, subjective value of the lifetime-rest. When the difference (T - t) disappears, i.e., when the lifetime has reached its end, (x) will become infinitely great. In the case when the end is impending immediately, i.e., when only an infinitely small interval separates (t) from (T), (x) will be at a maximum (p. 371).68 This idea is further illustrated through the following Figure 2, in which the horizontal distance OB represents the expected "own supply of lifetime S S TT' produced at a constant (marginal) cost (I) through the which is being Hermann Friedmann, Wissenschaft und Symbol, AufriB einer symbolnahen Wissenschaft (Mfinchen: Verlag C. H. Beck, 1948), p. 37lff.; my translation. 68At birth, i.e., when t = O, x will be a minimum. 44 (19 3mm mo . ST: 574 ‘51; ST; ‘51; ‘57 e-a <— <-— 6- <— r-__ \—&’ I 5r 0 T5. T4 3 A/FET/ME LIFETIME Figure 2.--Demand and supply of lifetime. consumption of the existence minimum (cf. Appendix A) and in which DTDT is the demand curve for "own" lifetime. STST and DTDT are shown to become identical beyond point T1° At birth, the distance OB obviously is at a maximum. Continuous living means that the vertical stretch of the supply curve moves closer and closer towards the origin (0), i.e., the supply of lifetime 45 decreases the longer we live. This "natural" movement of STST toawre (O) has to be distinguished from temporary, premature leftward jumps of S S T T' which may occur through life-threatening sickness, accidents, etc. To the left of some point, say T1 (T1 here corresponds to (t) in the above equation), the own price or value of lifetime begins to exceed its production cost (I): the price which a person whose death approaches is willing (and able) to pay (for time) increases. At 0, this price reaches its maximum. The personal investment in human lifetime (recreation-health expenditures, etc.) should therefore be expected to increase, the older people become; or the greater the proportion of old people within a population, the greater will the demand for "lifetime-extenders" become, ceteris paribus. If we take account of the fact, that during the individual's retirement span--which may correspond to the distance OTl in Figure 2--probab1y also the cost of ppoduction of lifetime (I) increases, because more leisure (Time Income, TY) and69 perhaps also more money income is needed to fulfill the existence minimum (Cf. Appendix A)--a fact which would be represented 69There is no doubt that Old people in general need, already from a physiological point of view, more rest, leisure and recreation to maintain their health, than younger people. 46 through upward shifts of the horizontal portion of the supply curve in Figure 2 to the left of Tl--the increase in the Own Price of lifetime would necessarily be reinforced. (2) The Characteristics of Time Time is not only scarce but, in addition, can be looked at as money (budget). Benjamin Franklin's famous "advice to a young tradesman": "Remember that pimp is money,"70 while characterizing much of a religious ethic, undoubtedly still pervades our contemporary western, predominantly secular, philosophy of living (Weltanschauung). In our western behavior, language and thinking, time is treated as money. We speak of: spending, saving, allo- cating, having, budgeting, wasting, losing, selling, stealing, and gaining time; we say that something is 70"He that can earn ten shillings a-day by his labor, and goes abroad, or sits idle one half of that day, though he spends but Sixpence during his diversion or idleness, ought not to reckon that the only expense; he has really spent, or rather thrown away, five shillings besides." Memoirs of the Life and Writings of Benjamin Franklin, 3rd ed., Vol. V (London: Printed for Henry Colburn, Conduit Street), 1819, p. 104: Advice to a young Tradesman, written Anno 1748. If we discount this quotation for its moral undertone, then it is as clear an explanation of the Income-Opportunity-Cost-Theory as one may want. According to Diogenes Laértius (V, 2n, 10, 40) it was TheOphrast (about 372-287 B.C.) who already used to say: "Time is a precious expenditure." Georg Bfichmann, Gefldgelte WOrte, Zitatenschatz (Berlin und Darmstadt: Deutsche Buch-Gemeinschaft, 1953), pp. 107, 422). 47 "worth" or not worth our time, that time is sufficient or insufficient, etc., although so far nobody has yet seen, touched or smelled time. The mystery is complete, when we then assert to be able to measure its duration 71 in fact and value ("or say we do and think we do"), measure it respectively through a unit of time (seconds, minutes, hours, etc.) and money itself. However, treating time like money, as a budget,72 can be justified only to the extent that we are aware of the distinguishing characteristics which exist between money and time--often overlooked-—and summarized below: a. Virgil's "Sed fugit interea, fugit irreparabile tempus" (But meanwhile flees, flees the irreplaceable time),73 expresses the basic uniqueness of lifetime, the fact that every new day is a step closer towards death, a process which we are unable to change: we simply cannot "replace" or repeat past time or "lost" time in the sense we can replace lost money through a gift of money. Bygone time is undoubtedly bygone; it is irreversible and irrepeatable. This we call the uniqueness of time, for 71D. W. Hering, "The Time Concept and Time Sense among Cultured and Uncultured Peoples," Chapter 5 in Time _—— and its Mysteries (New York: Collier Books, 1962), p. 89. 2Pitrim A. Sorokin and Clarence Q. Berger, Time Egdgets of Human Behavior (Cambridge: Harvard University Press, 1939). 3Virgil, "Georgica," 3, 284 (quoted in G. Bfichmann, op. cit., p. 128), my translation. 48 something which cannot be replaced or substituted for, is said to be unique. NO two days can be exactly alike for the same person, be it only because of their successive- ness. Furthermore, all time must necessarily be human 31mg, as only the living human individual can be the measuring rod, the time-divide, in relation to whom past, present and future can have meaning. The uniqueness of the individual in turn implies the uniqueness of time.74 In contradistinction, it is one of the essential features of money units as a medium of exchange, to have identical value for everybody, quite independent from variations in the marginal utility of money. b. The three—dimensionality of time as past, present and future, the fact that time can only occur . . 75 . . succeSSively, never Simultaneously, characterizes time 74cf. John Dewey, "Temporal seriality is the very essence, then, of the human individual" ("Time and Individuality," Chapter 7 in Time and Its Mysteries, op. cit., p. 146). cf. also, Rollo May, "Contributions Of Existential Psychotherapy," Chapter II in Existence--A New Dimension in Psychology and Psychiatry, ed. by Rollo May, et al. (New York: Basic Books, 1958), especially pp. 65-71 and 101-108. 75Except in certain god—like "peak experiences" (creative moments), which have often been characterized through a simultaneity or "synchronicity" of time. For example, cf. C. G. Jung, The Structure and Dynamics of Epe Psyche, Vol. 8 of the Collected Works, Bollingen Series XX (New York: Pantheon Books, 1960), especially pp. 435, 518, 531. As an example of the "tree" of poetry, the following lines of T. S. Eliot's "Four Quartets" (Burnt Norton) may be illustrative: 49 essentially as a flpw_(although for analytic purposes, time can sometimes be treated as a stock), while neither the stock nor flow aspects of money can be said to predominate.76 c. Almost identical with its flow character is the non-storability aspect of time.77 Neither can time, like money, be stored to be used in the future, nor can time be added simultaneously and instantly. Time is additive and exists only through living (it), for time has no independent existence apart from the living human being. Time must continuously be spent, in the process of which it is added and becomes past. The time budget thus is necessarily always completely exhausted: con- sumption and production of time occur simultaneously. Time saving can therefore never occur in the sense of money saving, because the latter are abstinence Time present and time past Are both perhaps present in time future, And time future contained in time past. If all time is eternally present All time is unredeemable. . . . Time past and time future Allow but a little consciousness. To be conscious is not to be in time. 76We might be tempted to look upon the living or dead human body itself, at any particular moment of time, as a stock of time, i.e., View age as a certain quantity of imprisoned time. However, this would change the meaning of "stock" from its customary usage and extend it into methaphysics. 77Unless we employ a very broad interpretation of storability as indicated in footnote 76. 50 from present consumption for future consumption, while the former represent only a minimization of time expendi- tures for some uses of time in order to be able to maximize time expenditures for other uses. A money budget for a certain period is underexhausted by the amount of money savings, while the time budget for the same period is necessarily always exhausted. d. The uniqueness and individuality of time has a further implication: Time can be directly transferred only in person. For example, a servant can exchange, transfer his work-time against the money wage, or the carpenter can directly exchange a certain amount of pig work-time against a certain amount of work-time of the mason, but in order to do so, both have to appear in person at the construction site, except in the case of homework. Money transfers and exchanges, on the contrary, usually take quite impersonal routes through financial intermediaries. "Time banks" could be imagined to perform only a function as markets for labor substitutes, i.e., if, for instance, a worker performing standard tasks should prefer to extend his holidays, play tennis the next day, etc., than to do his regular work during this time, he might be able to call up the time bank to arrange for and to "buy" a labor substitute for this amount Of time. 51 Time transfer processes do not only exclude indirect routes, but in addition terminate with the first round of spending: the carpenter cannot again spend the mason's time and the mason cannot again transfer the carpenter's time. (3) Money Price System vs. Time Price System In contemporary economic price theory it is customary to identify prices and budgets with money prices and money budgets (excepting the theory of exchange),78 although the existence of time budgets is undeniable and even primary. The standard theory of the price system should therefore be called more correctly the theory of the money price system. The latter system, being essentially an informa- tion or signaling system can, theoretically at least, solve as we know the five basic economic problems which any society has to face, i.e., H233 to produce, hpw_to produce, for whom to produce, how much to maintain, how 78For two recent exceptions compare the following papers: Gary S. Becker, "A Theory of the Allocation of Time," The Economic Journal (September, 1965), pp. 493-517; Jacob Mincer, "Market Prices, Opportunity Costs, and Income Effects," in Measurement in Economics, Studies in Mathematical Economics and Econometrics in Memogy of Yehuda Grunfeld, by Carl F. Christ, et a1. (Stanford University Press, 1963), pp. 67-82. 52 much to progress and finally it can adjust consumption to production within very short periods (rationing).79 It is the purpose of this section to demonstrate briefly that a time price system, under certain conditions, theoretically, could perform the same five basic functions and that time prices successfully could provide supplementagy (to money prices) information for resource allocation in some cases where the working of the money price system is imperfect, breaks down or is not working at all. In sections (1) and (2) of this chapter we have seen that money and time budgets in many ways are compar- able with due recognition of their differences. The spending of money for goods by individual consumers in a free enterprise system, we know, is basically the result of the confrontation of a system of more or less independent individual tastes, limited money budgets, and parametric prices. However, while for each individual separately prices may be said to be parametric, as part of a group of consumers, his spending of money nevertheless influences the determination of prices and therefore the allocation of resources. 79cf. Frank H. Knight, The Economic Organization (New York: Harper Torchbooks, The Academy Library, 1965). 53 The spending of individual time budgets8O may be viewed in analogous fashion, with the exception, that the individual is now not subject to "external" pricing of the market or firms (monopoly pricing), but can freely determine and vary the amount of time he wants to spend per unit of commodity and activity himself. He is his own (internal) time price fixer, although there may be some institutional upper limits on individual and total time prices: the concert performance lasting 2 hours; the camping permit which has a maximum validity of 14 days, etc. The only main difference to the spending of money budgets is that the notion of parametric_prices now may attain a changed double meaning, depending upon whether: a. The spending of a time budget is considered independently from existing or non-existing money prices, or whether b. the use of the time budget depends upon existing money prices. As to the former (a) case, we can imagine, to clarify our thinking, that in a state of terrestrial paradise, where time is still scarce but money prices are absent (all goods are "free"), individual time prices—-the amount of 801n a state of terrestrial paradise, where all goods except time are free, time budgets would be the only conceivable budgets at all. 54 time the j-th individual spends per unit of commodity or activity (1), i.e., (P%i), if there are j=1...n, individuals and i-l...m, goods, activities-~are parametric in the sense that constant amounts of time are spent per unit Of particular commodities and activities, or that the opportunity cost of foregone goods, pursuits, activities (other than work) is constant. But individual time prices may also deliberately be varied by the individual, according to the subjective change in feeling of this Opportunity cost, thus leading to a change in the allocation of the scarce time to specific goods. This turns out to be the most general-- ordinal--meaning of a "time disposition equilibrium" (Zeitverwendungsgleichgewicht"), already observed by 81 that for an individual the Gerog Sulzer in 1895, Marginal Utility per last time unit (hour, day, etc.) spent on a unit of good, activity A (MUA), must be equal lGeorg Sulzer, Die wirtschaftlichen Grundgesetze (in der Gegenwartsphase ihrer Entwicklung), (Zfirich: Albert Mfillers Verlag, 1895), especially pp. 190-194, 203-238, 544-545. cf. also Rosenstein-Rodan, op. cit., pp. 85 ff. Hermann Heinrich Gossen in his Entwicklung der §psetze des menschlichen Verkehrs und der daraus flieBenden Regeln ffir menschliches Handeln, published in 1854, should be credited for having first developed the law (known as Gossens Second Law) as it applies to the disposition of time. See Erich Schneider, Einffihrung in die Wirtschaftstheprie, IV. Teil: Ausgewahlte Kapitel der Geschichte der Wirtschaftstheorie, l.Band (Tfibingen: J. C. B. Mohr, 1962), pp. 168-190, especially p. 185. 55 to the Marginal Utility of the last time unit spent on a unit of good, activity B, C, ... (MUB, MU .), other- 'C"' wise a reallocation of time among the goods, activities, could make the individual better off. If in our pure state of scarce time, therefore, two hours are spent by the individual per unit of activity B, while four hours are spent per unit of activity A during the budget period, the utility per unit of activity A must be twice that of activity B at the point of equilibrium. There exist numerous examples in our daily lives where we consciously82 alter or fix the allocation of our time per unit of activity or good, in order to attain "time disposition equilibrium." Take the situation of a theatre performance, whose quality in terms of acting is so unsatisfactory that we do not find it "worth our time" to continue our visit and we leave before the performance is over, or, take a vacation trip which turns out to be so enchanting that we decide to extend the stay for a few days. Setting the alarm-clock in the evening is a way of individual time price fixing or maintenance for the good "sleep"; if we should oversleep, "disequilibrium" in the truest sense of the word would result and we are, k 2We emphasize "consciously, because it seems that a great number of our activities are habitual, implying that the allocation of time occurs without the effort of reflection, almost unconsciously, i.e., at a minimum of (thinking-) cost. 56 no doubt, on a lower indifference curve as a result of the plan failure. As isolated individuals, we hardly can signifi- cantly influence the total time price or the total amount n . of time, 2 PTi’ (total time expenditure per unit of j=l commodity (i) by j=1...n, individuals). Our individual effective demand, expressed through the time (e.g., two hours) we spent, for instance, during a theatre performance, would be too minute in comparison to the total number of hours spent by all present visitors.83 However, if several individuals together, simultaneously or succes- sively spend time for the same activities, they can and they are influencing the total time price.84 If in our 83If there are, e.g., 500 visitors present during the performance (j=500), every visitor spending two hours, then the total amount of time spent per performance (1) would be 1000 hours, of which our two hours are insignificant indeed. It is clear, that the size of the total time price per unit of activity or good, is a product of the number of time spending (voting) individuals per unit of commodity, the amount of time these individuals have Spent each and the Opportunity cost (i.e., what could be "earned" by using the time for a different purpose) per time unit. 84A kind of monopoly pricing could not be excluded as a possibility even under the time price system. Time voting (spending) organizations and firms could capitalize on the desire of individuals to increase the time price and thus influence the allocation of resources for certain goods, i.e., members of time voting organizations would be sent to particular supply points and would be paid for casting their time votes for the respective good. 57 assumed paradisiac state, everybody happened to go swimming simultaneously at the same swimming site, the resulting huge total time price would inform the "sponsor" of the paradise to increase the supply of similar sites. Time votes-~voting by feet and body--wou1d be an effective guidepost for resource allocation in this situation. The time measuring instrument, the watch, would take the place of the price tag. The system would be highly equitable, as everybody would be truly equal, insofar as no one has mpgg time to spend than anybody else (work is absent) and no one's time is valued differently from that of anybody else. The time budgets are all equal in size and value.85 Waiting queues (lines), crowded, congested places, would be indicators of excess demand, which may even occur in paradise when there occurs a sudden run on certain free items. This price system Eppld directly solve the $233-- for whom and rationing problems, while the remaining two 85This necessarily assumes that the Opportunity cost of swimming time is equal among the swimmers, an assumption and interpersonal comparison which may be questioned. The perfect equity of the system would however remain undisturbed, even when the opportunity costs are not equal, if resource allocation were based exclusively upon the quantities of expended time, i.e., were not based upon the value which individuals attach to this amount of time. 58 problems would not be at issue or would be external to the system under the assumed conditions.8( As to the latter (b) case, i.e., if the allocation of time budgets depends upon (an) existing money price(s), a case which undoubtedly is true in the present age, individual time prices of goods and activities will be parametric, if one of these money prices is parametric for the individual apd if the amount of time spent per unit of commodity or activity is constant. Let one hour spent in activity A (work) have a money reward (price) of P dollars and assume that it W would be possible for the individual always to spend his total time budget on activity A if he so wished, then, if the individual engages also in other activities than A, their reward (value) to him must at the margin--per unit of time spent on them--be as great as P This is the W' cardinal form of time disposition equilibrium, standing in contrast to the previous ordinal form, because specific money values (PW) are now attached to the time units. Expressed differently, the money Opportunity cost per unit of time spent on activity B, C,...Z, will be constant or parametric for the individual at a level not 86Whoever may be the paradise sponsor, nothing would prevent him to orient the investment and the pro— vision for future goods as wellalong "expected" time prices, population trends, etc. The VMP = PW efficiency criterion could also be maintained if time prices were substituted for money prices in the equation. 8 . . . . . smaller than PW. 7 The cardinal time consumption equili- brium condition almost reduces to the result already obtained under (a) above, because for the isolated individual the money opportunity cost P per unit of W, time (hour) spent on activities other than work is the same for all activities. If we are interested not only in the individual, but also in the total time price or total time demand for a good or activity, cases a and b have to be distinguished. While to each individual separately, PW is his parametric money time price per hour, for a group of individuals there may be more than just one PW, i.e., there may be several differing PW's. Each individual time vote may therefore be weighted by a different PW, i.e., the money opportunity cost prices per hour will vary and the system looses the perfect equity character of the previous pure or ordinal time pricesystem.89 __ 7We will see later on that PW is really an under- estimate of the money value of non-work time and that the true money estimate of certain kinds Of non-work time may vary. 88 , . . . There may even be several PW 8 per 1nd1V1dual. If there are peOple performing several different jobs (moon- lighting) for which they are paid different wage rates. 89In comparison to the present highly skewed income distribution, the equity of the time price system is never- theless much superior to that of the money price system. The quantity of own time per annum distributed among the population may also be uneven, but is not as uneven as income. 60 In addition, the size of the individual time budgets after the work time has been subtracted, may differ among individuals, so that the allocation of time--its amount and/or distribution--may consequently be different from that allocation implied in cases a, i.e., the case where the total time budget could be so allocated because work was absent. Moreover, although P is parametric in the short W run for the individual, for the total group of indi- viduals, the Pw's may be changed through a change in the allocation of time budgets as between work and other activities. With constant demand conditions, there need only be a group of individuals large enough to affect supply (of labor) by increasing the number of work hours sold at a given wage rate: the supply curve would shift downward and a new equilibrium in the labor market would be established at a lower PW. More hours of work have resulted in a general lowering of the remuneration of work, which in turn may reduce the supply Of labor and increase P etc. The individuals as a w! group impose "ppcuniagy external diseconomies" upon each .Other and the non-work time opportunity cost has been lowered paradoxically.90 90Under conditions of economic depression, this may not be too unrealistic a case: the downward spiral of wages may be reinforced through an increased supply of labor in terms of hours, as individuals try to maintain their income. Reversing a 19th century rhyme, we may say: 61 We have now to ask, how this kind of a time price system would answer the stipulated five economic questions, it being understood that the role of the cardinal time price system would now be supplementary or complementary and not an alternative to the money price system. Like under the pure or ordinal time price system a, the what, for whom and rationing problems could, theo- retically at least, be handled by the present system's money time votes, assuming that the government or some philanthropic organization provides the supply of goods free of charge (public goods)91 and with the reservation that the time votes would now be weighed according to 92 individual wage rates (P 's) W The time price system Whether you work by the piece Or work by the day, Increasing the hours Decreases the pay. (Encyclopaedia Britannica, Vol. II, 1959, "Hours of Labor," pp. 802—807). Cf. also Wladimir Woytinsky, "Hours of Labor," Encyclopaedia of the Social Sciences, Vol. 7, pp. 478-493, 481. During the 1933/34 depression, we find that in the USA as well as in Germany the hours of work were legally limited to 40—36 hours, in part reflecting the efforts to halt the above tendency. (Cf. Hermann Pechan, "Arbeitszeit," in HandwOrterbuch der Sozialwissenschaften, Vol. 1, 1956, pp. 408-411, especially p. 409. 91Free of charge here means free of a direct charge. Indirectly, people are paying for the "free” public goods through taxes and through the opportunity cost of resource withdrawal from their alternative employments. 92Under the money price system, individual money Votes are also weighed, i.e., weighed by income. A rich man who is able to purchase 10 more units of good B than the poor man, has a voting power (for B) which so to 62 could, therefore, turn out to be a public good price system, which actually is urgently needed. Empty, uninhabited, unused stores, places and buildings, would be indicators of excess supply, while crowded stores and places would signal the existence of excess demand. For activities, it would be the actual time spent at and during consumption, while for commodities speak counts (is weighed) 10 times that of the poor man. This multi-voting power is, however, only effective, if the rich man actually purchases a greater number of units of the same good than the poor consumer. Were the richer of the two men to buy also only 223 unit of B, both votes would be counted as equal in the market. This weighing mechanism differs from the above time voting mechanism, because the one unit of time spent for good B by the high wage earner—WIll count more than the same unit of time spent by a low wage earner. There is even an implied justification for weighing time votes by the wage rate, for the size of the wage rate is usually a signal of relative labor scarcity, and excess demands (waiting queues, crowded places) should from an economic efficiency viewpoint first be eliminated where--assuming equal degrees of excess demands to prevail--there are relatively more high wage earners voting, as this would save socially higher valued time. In waiting (room) situations (barbershops, physician's waiting room, etc.)-- where it is a frequent social practice to give priority of attention and service to certain people whose (time) opportunity cost of waiting is presumed to be relatively higher than that of other people (children, the poor, etc.) lower down in the social hierarchy--we find a confirmation of the fact, that people sometimes actually behave according to interpersonal comparisons of the relative value of their respective time. When the time voting, for instance, takes place not in waiting lines but in OR-areas, this justification may appear less important but still remains valid. An analogous justification for money income weights could be maintained only if all income were wage income. 63 it would be pprchasing time: waiting time or simply the number of purchases of a good, if they occur instantane- ously, which would be relevant.93 The comparative size of the total time (prices) Spent by j-individuals for i—commodities and activities,94 m n . m n . . i.e., Z 2 P3., or "cardinally” Z Z P]. x P], . . T1 . . Ti W 1:1 3:1 i=1 j=l could be measured by special administrative time-wage- keepers and resources could be allocated according to the relative money value or size of the time votes "issued" for the i=1...m, commodities and activities respectively. The problem of how to produce and how to organize production most efficiently, revolves around product and factor prices and the profit—loss mechanism of competition. 3Money has often to be expended for goods which are less "good" than others. In fact, we sometimes spend money for discommodities in order to be able to get to commodities. The money cost of trips to work, to the theatre, etc., may be examples. Likewise, time has often to be expended as a "necessary evil," in which cases it can only be considered as a "joint element of economic goods" (Rosenstein-Rodan, op. cit., p. 86), for no independent discommodity will ever be freely consumed. Waiting time, the work-trip time, etc., are examples of this "bad" and burdensome time expenditure (unless they are enjoyed as commodities) which one usually tries to minimize in order to maximize the time to be spent for economic "goods" proper. All that counts, however, for the proper functioning of both money and time price systems, is that money and time are actually expended in the market. 94The "size" per good or activity is the product of the number of people voting for the good, the amount of time everybody allocates per good and in the case of the cardinal time price system, their respective money wage rates. 64 Once product prices of public goods are determined along the lines sketched in the previous paragraph, i.e., once the government time-wage-keepers have set up periodic time price lists for the various free government products subdivided for various demand regions of the consumption sector of the economy,95 they can pass on this information to the public_good production sector of the economy which in order to employ resources most efficiently, has to follow the "rule" that the value of the marginal product (VMP) produced by a particular factor must be equal to its factor price. If we know factor or resource prices, other than wages, which are determined, like the money wage rate, in the factor market where money prices prevail,96 there is nothing to prevent the execution of the "rule" and thus the efficient allocation of resources. 95For OR, the U.S. Government has already made it a policy that recreation use be measured and reported in terms of "visitor-hours." Sophisticated statistical methods will be employed in the measurement of this data (cf. Appendix C). (A Uniform Method for Measuring and Reporting Recreation Use on the Public Lands and Waters of the United States, prepared by Recreation Advisory Council Study Committee Number Two (Washington, D.C.: April, 1965], 56 pp., mimeographed. Cf. also Recreation Advisory Council Circular NO. 6, Op. cit. 96Although the existence of some factor time prices would not prevent the efficient allocation of resources, i.e., money factor prices are a sufficient but not a necessary condition for the applicability Of the "rule." 65 This illustrates, how both money and time prices can coexist side by side-~the money time price in the left side and the money price in the right side of the VMP = PF (2 PT x MPP = PF) equation (assuming perfect competition in the factor markets)--and that both price systems are not competitive but complementary. Finally, the maintenance and progress problems would have to be solved by our new price system. Again, this could be done by unifying the money price, i.e., the interest rate (r) and the time price in the familiar discounting formula for investments: Present Value = of Investment Expected Time Returns of Inv. ($) (1+r)n l—‘MD In other words, investment will occur if the discounted present value of its expected time returns (dollar time prices for n-periods) is greater than the present cost of the investment. A comment should be made about the comparability, ppiformity, compatibility and justification of coexistence of/between money prices and money time prices, which we presupposed above. Not only do both prices have a common root in the common and related scarcity of both money and time budgets (cf. sections 1 and 2), but we know also that under competitive assumptions (money) product and factor prices are supposed to be signals, simultaneously expressing 66 both relative resource scarcities or costs (supply) and the effective desirability of these resources/products relative to human wants (demand). To be comparable, coexisting prices, money time_prices must correspond to these price characteristics, which are a necessary con- dition for economic efficiency. Relative resource scarcities and demands are revealed in total and individual (money) time prices in so far as: (i) the lower the positive leping supply curve Of commodities, i.e., the greater the capacity and volume of goods 93, £3, for and gppund which people spend their 97 time, the less will be, under constant demand conditions, the crowding per unit of the good and/or the lower will be the waiting time price for each individual per unit of commodity. If the demand curve is inelastic, the total time price per unit of the good will be lower than before the supply increase. The reverse will be true if demand is elastic. For activities, like concerts, OR, etc., an increase in the number of concert halls or OR-areas (supply), will likely increase the total time expenditure of individuals for these activities, as this demand 97We assume here that the supply of the goods is already existing, so that time votes can actually be expressed. Expected time votes for still non-existing supply can, however, be also a guide for the allocation Of resources. Crowding in existing parks is both a signal for more (new) parks and the extension of existing parks. 67 is highly elastic (assuming ticket prices to be zero or ccnIstIUTt). Upward (downward) shifts of the demand curve will under positive sloping supply curve conditions, lead to increasing (decreasing) total time prices. These results would be true even in a non-monetary or paradisiac state. Effective demands (desirability) in terms of time expendi- tures from limited, scarce time budgets would merge with physical supply conditions to give birth to total and individual time prices for specific goods.98 The amount and/or value of time spent per period for particular goods would turn out to be as much a measure of the relative esteem or worth of goods as are normal money prices. 981m OR, supply and demand curves will be strongly interdependent, especially as shifts (increases) in the supply of OR areas usually call forth shifts (increases) in the demand for these areas. 99This conception of a time price system may provide a connecting link between the Ricardian ”Labor Theory of Value" and the Austrian opportunity-cost notion. We have to remember that for Ricardo and Marx, the value of a commodity was determined by the quantity Of labor-time (or "socially necessary labor time" for Marx) contained in, or imprisoned in the commodity, while for us the value of certain time intensive goods and activities is determined either by the quantity of non-labor-time (own time) spent by one or several individuals (laborers or non-laborers) per period on, in, for and around the good (Ordinal Time .Price SystemT, 5? by_Ehe same quantity of time multiplied with the respecfive wage rates (opportunity cost) of the individuals (Cardinal Time Price System). Since the Industrial Revolution, both money- and own-time budgets have increased substantially, above all for workers. Our new price system, if adopted, would even more improve the lot of the working class by giving them not only an increased command over money goods, but by giving 68 We, so to speak, would Spend ourselves (our time) at supply points, our length of stay, our individual physical appearance and presence would substitute for anonymous money bills. (ii) When money- and money-time prices are co- existing, then money wage weights will be an additional guarantee for the fulfillment of the economic efficiency criterion for time prices. As we saw already, money wage rates are indicators of labor scarcities and labor desirability. Weighting ppre time prices (EZP%i) with 3' Ti wage rates, giving us money time prices (ZZP x P%), is in itself a melting of two price systems, each of which fulfills the efficiency requirements separately. Money time prices therefore conform to the efficiency pre- requisites literally "twice“I and are interdependent with money prices proper. That this interdependence is truly a two way affair, can be seen, if we remember that money wages through labor supply (sold time) depend upon the allocation of individual time budgets (to work), thus depend in turn upon the expenditure of pure time. everybody an equal vote in the selection and supply of public time-intensive goods. A certain irony becomes apparent: Marx used the Labor Theory of Value to demonstrate the exploitation of workers. We use a non-labor theory of value to show how not exploitation, but improvement of worker's living standards would result. 69 While we have here sketched only the pure theoreti- cal outlines of the time price system, we will try to demonstrate the usefulness and applicability of the analysis in subsequent chapters. Here we reemphasize, that this system can never, even theoretically, be feasible, unless the goods to be allocated and produced are "free" (public) goods, for no private entrepreneur could exist on time prices which are essentially only accounting prices, unless he were reimbursed by some philanthropic organization or the government. The issue at stake is not the replacement of the traditional and present price system, nor the superiority or inferiority of the one or the other system, but at issue is whether the time price system can fill some of the gaps, shortcomings of the money price system, perhaps supplement it in the case of goods which are not traded in the customary market, which have a zero or near zero money price (public goods), or goods with strong external economies-diseconomies. Our following case study, in which the time price system is applied to the measurement of primary OR benefits, should shed some light on whether this is both possible and feasible. CHAPTER IV THE ECONOMIC VALUE OF TIME In the previous chapter, while discussing the function which time could perform as a possible signal for resource allocation, we used the wage rate (PW) to weigh the pure ("ordinal") time prices, which thereby were transformed into "cardinal" money time prices. Here we will begin to look somewhat closer at this value of time. We know that time like most other goods has a production cost amounting to an "existence minimum" of consumption (I) (cf. Appendix A). This is the Own Price (cost) (PI) of supplying one additional day to oneself, or alternatively, the Own Price which one must pay for effectively demanding one more day, like: TOTl; Tsz; T2T3; etc. in Figure 3. In Figure 3, S S is the horizontal marginal cost T T curve of time supply to oneself--assuming (I) to remain constant over time--and DTlDTl; DTZDTZ; DT3DT3; etc., the demand curves for additional lifetime days (for simplicity we abstract here from the T10 portion of lifetime in Figure 2 and thus restrict our analysis to 70 71 /\ M.‘ Jr. 31" 371. 31) I I l g: I l -fl I 2'! I fl PT I f‘ l 1’ l " I Ei‘fr EA E! E) 7 EB ‘ST F: 1h“ 33% I”! I”: To 73» 15 Ti 13 CDAY§D Figure 3.--The own price of lifetime. the TlB portion of Figure 2; the basic conclusions will thereby not be affected). The DTDT'S will be perfectly inelastic, up to a maximum own price where they become horizontal, because lifetime demand is an either-or decision. The demand curves can therefore never--as long as we choose to live--lie to the right of the indicated day along the time axis, because time can, as we saw, only be produced successively and not simultaneoulsy. Should the (effective) demand curve not go through its lifetime equilibrium points El’ E2, E3, etc., for instance through insufficient income (poverty), like DTODTo in Figure 3, starvation (death) would result. LI 72 "Death equilibrium" at (A) indicates a supply of only TOTD hours, which is TDTl hours short of another day. D D could equally well depict a suicide situation: To To the absence of "taste" for life would here cause death equilibrium. This Own Price (value) is really the price of time as a resource, factor or budget. P is therefore I not the price of time (day) as an end product.100 Figure 3 only shows the supply and demand conditions of the own factor market for time. The product market price of time is determined in another way, as we shall see, and results from the allocation of the produced short run time budgets (day, year, etc.) among alternative goods and activities. In Chapter III we already observed that even if lifetime were infinite, the time scarcity problem would thereby not be eliminated, because time can only be produced in "quotas,' small amounts. In a hypothetical state Of paradise, where all goods except time are abundant and free, the economic problem would consist in 100An exception might be seen in the case where there exists no employment or use for the factor time; but this is impossible, for as long as time is produced, it is completely spent or exhausted on goods and activities (cf. footnote 9). A possible exception, however, would be the case where PI equals the potential money income (PY), (cf. Appendix A), i.e., when the total revenue of time (income) just equals its total production cost (I) and no time profit is earned. 73 allocating this scarce time among alternative possible uses. To engage in activity X during time span TX would still preclude the spending of this time from other possible uses Y, Z,... etc., for our limited human capacity enables us to engage only in a limited number of different pursuits at the same time.101 What holds true for every earthly valuation would continue to be valid also in the pure state of paradise: the value of time spent in activity X would be derived from the opportunity cost of alternative foregone pursuits Y, Z,..., for we should always remember that: Every valuation lg a comparison; we have no conception of an absolute utility or an absolute standard of utility. The notion of value is meaningless except in relation to alternatives of choice. Not only is utility measured by another utility--all things are measured by things of their own kind as 101The capacity to use a particular time period for several instead of only one activity (multiple con- sumption), to read, for example, the newspaper while eating or while steambathing, etc., may be a great time saver. However, there may also be an associated cost of increased nervousness and ill health, with which one has to pay for such time savings and which (i.e., the costs) our human myOpia again too often begins to realize when it is "too late" to prevent the "manager sickness." On the other hand, the preference for a great number of simultaneous activities, the desire to do things ppp_ instead of later, may be rationalized by resorting to the uncertainty and risk discount Of the future (time). In fact, there may be a trade-off between the number of present activities and the size of the long run lifetime budget, i.e., the latter becoming shorter (through adverse health effects) with the increasing preference of 22! activities. 74 standards--but its existence is conditioned by that of the alternative; . . ."102 In our contemporary non-paradisiac monetary economies,103 EEEE (sold time) for most people is undoubtedly still one of the major "alternatives of choice" for the employment of the produced short run time budgets. The valuation Of the own time can therefore be based upon the foregone value of sold time (work),104 i.e., its wage (salary) income Opportunity cost. If an individual spends part , of his time for non-work uses, then under certain assumptions (Chapter IV, 1), he will value--ref1ectively or unreflectively--this non-work time (own time) higher 102Frank H. Knight, Risk, Uncertainty and Profit (New York: Harper Torchbooks, The Academy Library, 1965, 1921), Chapter III, p. 63. 103 . In non-monetary economies, e.g., the value of time spent with girl (0) must be at least worth the value of the foregone time not spent with girl (X); or the value of time used for pleasure hunting, must be at least worth two baskets full of fishes foregone, otherwise spending the same amount of time with girl (X), or using the time for fishing instead, would make the individual better off. 104Other yardsticks than the money value of work time would be possible (cf. footnote 103). There is, however, none that is more convenient and Obvious than the one chosen, i.e., Pw. In comparison to our analysis Of the value of time in a paradisiac or a non-monetary state, we see that the money (wage) value of time is simply a special case, a special method of valuing time. Besides the money wage (income) weighted value of time, there often exists, for instance, a psychic wagg (income) weighted time value. (Cf. New York Times, February 28, 1966, "Salesmen Reported in Love with Work--Not (ugh) Money," p. 29). 75 than his work-time (sold time), whose return is income. This proposition will be explained diagrammatically in more detail in the subsequent sections of this chapter. 11) The Assppptions of the Model We maintain that (PW) is a possible weighting factor for the determination of the value or price of individual human own time per hour. This contention is based upon several assumptions, which we now begin to state as explicitly as possible. A. We assume an ordinal, convex, non-stochastic and continuous utility function of the following type:105 105M. Bruce Johnson in "Travel Time and the Price of Leisure," The Western Economic Journal, Vol. 4, NO. 2 (Spring, 1966), pp. 135-145, has questioned the validity of specification of the neoclassical labor-leisure (here sold time-own time) utility function, into which he wants to introduce as an additional and separate variable work time (sold time, in our terminology). We think, however, that the traditional utility function is still the correct one, mainly because the value of leisure already includes the disutility of work and is reflected in the slepe of the indifference curve between leisure and income, i.e., the value of leisure and the disutility Of work are interrelated variables; the greater the latter, the greater will the former be and vice versa. Johnson's function is thus clearly overspecified. A detailed critique of Johnson's thesis will be found in Appendix B. C. J. Oort in "The Evaluation of Travelling Time," Journal of Trangport Economics and Poligy, III, NO. 3 (September, 1969i? pp. 279-286, uses the same three-variable utility function as B. Johnson. See also: John D. Owen, The Price of Leisure (An Economic Analysis of the Demand for Leisure Time) (Rotterdam: Rotterdam University Press; Montreal: McGill- Queens University Press [a coedition], 1969), 169 pp., especially pp. 20, 23. 76 (1) U = u (y, OT), with: g—g- >0; i.e., utility (U) per period is positively related to the . 106 quantity of income (Y) and the amount of own time (OT). Function (1) is subjected to the time budget constraint (cf. Figure l): (2) OM = OT + ST, where OM is a fixed time period, here one year and ST = Sold Time, and the moneyybugget constraint: (3) Y = PW x ST, where PW is the money wage rate per hour of ST. B. Between the goods (Y) and (OT) we assume a relationship of continuous substitutability to hold, i.e., money income can be substituted for decreases of own time and own time can be substituted for decreases in money income in such a way, that the total level of satisfaction or utility for the individual remains constant after the sub- stitution. This substitution relationship we assume furthermore to conform to the specific law of: 106(U) is not only a function of the amount of own time per period, but also of its distribution. The distri— bution of OT is defined through the frequency, size (duration), and seguence of the OT-intervals, which make Up the total amount of OT per period. The full formal treatment of this distribution variable cannot, however, be within the scope of this study and must be left for a separate treatise. We will later on discuss the relevance of the OT-distribution for our model. 77 C. Diminishing Marginal Rates of Substitution, represented in Figure l by convex indifference curves, like IlIl' IRIR’ which we assume to be non-intersecting, each curve indicating separate and ordered levels of satisfaction or combinations Of (Y) and (OT) between which the individual is indifferent. With reference to Figure 1 in which OM is a particular period of personal time (e.g., one year), the above law says that the more units of OT our individual has relative to income Y (moving in eastward direction along the indifference curves), the less he values additional, equal units of OT (= ACT), or what amounts to the same thing: the smaller are the units of income Y (= AY) which he is willing to substitute (give up) for additional OT's in order to stay on the same indifference curve. D. While the indicated indifference curves repre- sent the subjective rates at which the individual is willing to transform income into own time and own time (sold time) into income, we assume also that there exists a market in which the individual objectively is able to transform his time into income (through work) at a--in the short run constant--money wage rate P which is shown in Figure l as w! the negatively sloping line ME and which may or may not be independent of the number of sold time hours the individual wishes to sell. Later on we will discuss the case of a kinked wage line. 78 In the case where the individual works on more than just one job (multiple job-holding; "moonlighting") and where the wage rates of these jobs differ among each other, Pw would have to be a weighted average of the multiple wage rates, the weights corresponding to the number Of hours worked under each wage. This difficulty can however be circumvented by drawing separate figures, like Figure 1, for each different employment and wage rate.107 For non- wage employments, like salaried jobs, one can easily arrive at a Pw by dividing the normal daily-, weekly-, monthly-, or annual income, exclusive of fringe benefits, vacation pay, etc., by the respective number of sold time hours. Under the market conditions given by PW, the indi- vidual will reach his highest level of satisfaction (utility), where one of his convex, continuous and non- intersecting indifference curves--each indifference curve lying further to the northeast from the origin 0, indi- cating a higher, ordinal level of utility--is tangent to the wage rate line P In Figure 1 this is the case at W. point E on indifference curve 1111' In other words, KM units (hours) of time are exchanged (through work) for an At income per period amounting to BK — SO dollars. 107Cf. Leon N. Moses, "Income, Leisure, and Wage Pressure," The Economic Journal (June, 1962), pp. 320-334. 79 equilibrium E the marginal rate of substitution between own MU “I MUOT time and income, i.e., is equal to the negative slope of the wage line PW. E. Implicit in the equilibrium notion at E is the assumption that the individual can freely vary the amounts108 of time he wants to sell for income (Y), or expressed negatively, that nobody/nothing forces him to sell more or E: less time than he would choose himself. Under conditions of slavery, forced labor, fixed working hours, unemployment, etc., this assumption may not be tenable. While we admit this exception, it is however frequently objected, in addition, that the above assumption is not realistic,109 in so far as work hours (ST) are institutionally, socially Qgtermined ("standard work week," cf. L. N. Moses, op. cit.) and are, therefore, not subject to the free choices of individuals. The speciousness and self-deception of this objection is however revealed through a closer look at what really determines the hours of work in our present western societies: 108Distinguished from the freedom to choose amounts of ST must be the freedom to choose the distribution of these amounts. The latter "freedom" in general seems to be less "free" than the former. 109The worker "is seldom in a position to determine how much of his services to sell (i.e., how many hours to work):" Tibor Scitovsky, Welfare and Competition (London: Unwin University Books, 1952), p. 83. 80 . . . the individual is like the perfect competitor: to each individual separately, the number of hours of work per week may be fixed, yet the level at which it is fixed is the result of the choices of the individuals as a group. If at any moment this level of hours is, say, larger than on the average people prefer at the given wage rate, this means that any employer who makes them shorter, who adjusts them to the workers' preferences, will make employ- ment with him more attractive than employment with others. Hence he can attract the better people or attract people at a lower wage rate. Employers 1 thus have an incentive to adjust working conditions ' and hours to the preferences of the workers.110 ‘ Not only are working hours today continuously adjusted to ‘. the demands of the employees through labor-management negotiations, union contracts, "organizers," strikes, \ etc.,111 but there exist Often overlooked additional and I very individual ways of varying, at the margin, the own time - sold time proportions per period: overtime work, part-time work (moonlighting), miscellaneous leave, unpaid 110Milton Friedman, Price Theory (A Provisional Text) (Chicago: Aldine Publishing Company, 1962), p. 205. See also John D. Owen, The Price of Leisure, pp. cit., especially pp. 12-15. Only in so far as the choices of the "group" are the result of non—unanimous individual votes, can there be discrepancies between the preferences of an individual and that of the group. llle. Engyplopaedia Britannica, Vol. II, 1959, op. cit., p. 807: "The demands of uniOns, sometimes for higher wages, sometimes for shorter hours, and the related pressure exerted upon legislature to limit daily or weekly hours, ultimately reflect the choices of individuals within and—without ufiiOns, and are not separate forces. Union bargaining power and legislative enactment at times accelerated the decline of weekly hours, but it is unlikely that over a period of a half-century their influence has been predominant" (my emphasis). 81 leave, absenteism, malingering, do-it-yourself, black- work ("Schwarzarbeit"),112 are obvious examples.113 112Black-work (Schwarzarbeit) is a rather wide- spread phenomenon in Germany. It amounts to paid work (mainly craft work) in violation of certain labor market controls and regulations. The output of this hidden labor market was estimated (conservatively) at 1.5 billion DM in 1955. Thus, even when there exist legal limits to work hours, the expression of the individual preferences for ’T E the desired number of work hours cannot be stopped, but will, if necessary, be effective "underground." Cf. Georg Turnau, "Die volkswirtschaftliche und finanzwirt schaftliche Bedeutung der Schwarzarbeit," Diss., Wirtschafts(uniSozialwissenschaftliche Fakultat der Univ. zu KOln (Joseph Hansen, Telgte, 1958), pp. 10, 21, 26, 37. See also "Multiple Jobholders in May 1964," Monthly Labor Review, March, 1965. 113L. N. Moses (op. cit., p. 321) assumes that some Of these devices "can accomplish only a limited reduction (my emphasis) in hours . . . , since workers who use the . . . devices too freely risk being classified as unreliable." This assumption, in the form stated, is, however, only of limited usefulness, if we remember, that the degree of "limitedness" is a direct function of the tightness and looseness of the labor market. (Cf. Wall Street Journal, 1966, p. 1: "More Workers Gather Nerve to Switch Jobs As Labor Gets Scarcer"). Apparently, if workers fear loosing their jobs in threatening unemployment, lay-Off situations, the desire for more own time through malingering, unpaid leave, etc., will be at a minimum (during the relatively mild recession in Germany in 1967, some workers are even reported to have continued working, although they were sick enough and thus justified to stay at home; see General Anzeiger, Bonn, Germany, May 8, 1967, p. 1: wErank"), while the reverse will be true in times of labor scarcity. Expressed differently, the desire to reduce ST-- shown by a movement of indifference curves along the wage line--will only exist, when the worker is also able to effect the reduction (i.e., when the labor market is tight), without incurring the risk of being forced into less desirable lines of work or non-work. --.‘. :- 82 Furthermore, as long as there is free entryyinto occupations, the choice of an occupation is at the same time also a choice of the hours of work which go with the particular occupation. This represents therefore another possibility of individual free choice of sold time.114 Finally, our analysis so far has implicitly dealt only with dependent, contractual work. It goes without saying, that one Of the significant advantages of "free" professions, i.e., independent, non-contractual work (self-employment), most Often is, in particular, the possibility of relatively free variability of work hours and their distribution. The above assumption of free choice and determina- tion of sold time (work time) is however more restrictive than is really necessary for the justification of our model, i.e., it is a sufficient but not necessary condition. A necessary condition and less restrictive assumption, for our purposes, is that the individuals under consideration, i.e., the outdoor recreationists, should be 2219 either to work (sell) as many hours as they wish per period (at the given PW), or, that in case they are unable to do so, they —_— 114For a theoretical demonstration that those individuals who choose occupations which are relatively skewed towards leisure characteristics tend to be "leisure- 1overs," while those individuals who choose occupations which yield relatively fewer leisure characteristics tend to be work-lovers, see Kelvin J. Lancaster, "A New Approach to Consumer Theory," Journal of Political Economy, LXXIV, No. 2 (April, 1966), pp. 147, 155. 83 would not prefer to work during the time spent in OR, i.e., that they are either not forced to sell fewer hours of work--through various forms of "undertime" or enforced own time (involuntary unemployment, lay-off, etc.)--as they really wanted to at the given wage rate, or that, if undertime exists, the part of own time spent in OR is not 115 considered by the individual as part of undertime. Looking at Figure 1, this means, that actual sold 1L time hours may deviate from the desired (planned) sold time I hours (indicated by the equilibrium position at E or K) in the westward direction (overtime) and in the eastward direction (undertime)116 with the reservation, however, that in the latter case (of deviating undertime), OR-time must not be considered by the individual as part of the deviating undertime, or that it if so happened, some form of extra compensation for the undesired deviation be found. This does not amount to saying, that we assume the individual to be fully employed--according to his standards of full employment--for we even pgrmit unemployment under 115ORRRC Report No. 5, p. 15 (Table 5) Shows that the participation rate of unemployed responding outdoor recreationists in 1960/61 was very low (0.1%), a fact, which seems to support our assumption. See also ORRRC Report NO. 20, p. 11, p. 14, Table 1]. 116We will later on explain this possibility diagrammatically in more detail. 84 the above two conditions. Involuntary overemployment (overtime) we permit unconditionally.117 Potentially, at one extreme, our assumption implies that the individual is "free" to sell all his time (through multiple jobholding, day- and night-shift work), i.e., that he ultimately is "free" to commit suicide through overwork and overexhaustion118 (cf. Appendix A). 117For the ultimate purpose of this analysis, i.e., the determination of the money value Of OR areas, even this less restrictive assumption, although sufficient, will not really be necessary, as we will see later on. The present analysis only deals with the single individual, while the money time value of an OR area will depend upon a great number of individuals (visitors) and their relative wage rates, relative length of stay, relative equilibrium or disequilibrium positions. Individual cases for which the above assumption does not hold true may thus be brought into balance (or be outweighed) through other cases which more than just fulfill the assumption, i.e., it is the average of the individual wage rates or income opportunity costs, that will together with the total amount of own time "consumed" by the OR-area determine its money value. 118Experiments of temporary sleep deprivation have shown that: "The cerebral cortex can prolong the waking state, but not beyond certain limits. Sixteen hours of wakefulness in 24 is probably near the physiological limit Of tolerance over the long run for most Of us" (Nathaniel Kleitman, "Sleep," Scientific American, November, 1952, P- 4). "The effects of chronic sleep loss are almost unknown . . ." (”Current Research on Sleep and Dreams," U. S. Department of Health, Education, and Welfare, Public Health Service [Washington D.C.: U.S. Government Printing Office, 1965], p. 27; my emphasis). Of course, an individual who continuously reports to work overexhausted, sleep-deprived, will soon loose his job and his potential suicide will thus ultimately not really be caused (after a time lag) by the lack of a leisure existence-minimum (cf. Appendix A), but by starvation, for no job ultimately means no income and no income means no bread but death. Being unemployed, however, means that the individual has again enough leisure to 85 The fact that most people normally work only for a fraction (about one third) of their potential total personal time per year does not mean that they are not able to and could not sell more work time,119 but means, that they recuperate from his exhaustion, by living off his pre- viously earned income. Thus he will soon be able to work again and repeat the maximum work - maximum leisure cycle, if he so wishes--a rather uncommon OT-ST distribution indeed. This queer distribution of OT—ST would actually be . ‘ zar-nr conceivable only, if the individual is a self-employed, independent worker. The elaborate studies on the "economic I optimal work-day" (cf. Otto Lipmann, Das Arbeitszeitproblem, ‘ Berlin, 1924), i.e., the number and distribution of daily work hours which makes a days' production (output) a maximum--the scientific results of "work physiology" (Human Engineering), time-motion studies, etc., which are concerned with the most "efficient" (in terms Of output) distribution and length of rest--recreation periods ("Erholungszuschlag," “Erholungszeiten,” etc.)--show, that the employer would and should be interested in preventing a non-optimal amount and distribution of ST-OT. He might even be willing to pay "premiums" to induce the individual to sleep or to rest for a while, if the individual happens to be such a neurotic work-preferrer. In one sense, therefore, the individual would never really be able to work the maximum potential number of hours per annum, because of his physiological limitations. This, however, does not mean that within his given situation and physiological limits, he would not be able to adjust his ST-hours according to his preferences. 119Sleeping time, e.g., cannot be treated like a "fixed factor" which has no opportunity cost, because normally nobody forces us as adults to sleep. As long as we could employ sleeping time in some other non-sleep uses--among which work is an Open possibility--we cannot, under apprOpriate employment conditions, hide under the blanket while other individuals are working night shifts and at the same time claim that we really had no other choice than to sleep. It just would be another illustra- tion of Sartrean "bad faith," in which a free "pour-soi" (for-itself) reduces himself to a choiceless "en-sci" (in-itself) or object, in order to escape the responsibility of his preferences and choices (cf. Jean-Paul Sartre, Eging and Nothingness). Too often it is forgotten that living-—which means yes" for life--can only be truly authentic living in 86 have chosen, reflectively or unreflectively, to work for money only part of their time (their OT is worth more for them than PW per hour), i.e., that they ppefer to continue to live and to live relatively healthy lifes, in which the consumption and spending of own time (leisure) 3139 plays a part (revealed preference). We assume,therefore,that earnings are foregone for the total amount of OT, which includes free weekends, evenings and nights, vacations, holidays, etc., for if the individual really wanted to sell time (work) during this OT, he could find some employment (excluding for the moment the possibility of unemployment), be it only at a minimum wage. confrontation with the possible no" against life, i.e., suicide. Our analysis, by showing economic decisions to be at the same time also existential decisions, not only should create, or help creating, a greater awareness of previously unexamined, unreflective choices (cf. R. May, op. cit., p. 90: "I am doubtful whether anyone takes his life with full seriousness until he realizes that it is entirely within his power to commit suicide"), but should simultaneously assist in bringing economics, philosophy and psychology closer together, ultimately culminating in "Existential Economics." Furthermore, as will become obvious in Chapter IV, 5, sleeping time is a "natural" way of gaining a time distance (TD) to the next day, thereby enhancing "tomorrows" scarcity and value. Sleep is, so to Speak, an investment in the value of the next day. Through sleep we are able to attain a distance from yesterday (a night may cure many wounds; it helps us to forget; in it we bid farewell to sorrows and suffering; it is the no man's land, the dreamland between yesterday and tomorrow, is thus pure present), are able to greet a "new," fresh morning (day). Sleep thus enhances the variety of life. Through sleep we are each day "born anew." Preferring sleep over work seems to be, therfore, a quite good and rational (natural) choice with ample returns. 87 If the individual could find work at a certain minimum wage, but actually refrains from working because this wage is too low for him, then this means that this possible ST, now a form of OT, is worth more to him per hour than the minimum wage rate. Even in case an individual would actually be unable to sell time, e.g., through physical disability, laws, etc., this does not disprove our thesis, for preferences could still exist. All that is ultimately necessary is that the individual can potentially imagine the alternative "work" (ST) at a certain P and then prefer the situation he is W in, i.e., that of own time (OT). F. At the other extreme we admit the possibility that no time at all may be sold for wage or salary income, which may be true for students, children, the leisure class, retirees and other individuals. In our context, this implies that outdoor recreationists may prefer not to be members of the labor force and thus should not be con- 20 . l . . . Sidered as unemployed. The assumed necessary condition (point E) only requires that outdoor recreationists could 120 p. 15, pp. 16-17 (chart 1-2), pp. 21-23 (Tables 17-18), p. 40--for evidence of the low OR-participation rates of Older and retired peOple, people who are not in the labor force. ORRRC Report No. 5, pp. 14-15 (Table 5) indicates that according to questionnaire respondents, 9.8% house- wifes, 6.3% students, 2.7% retired and 0.1% unemployed peOple participated in OR in 1960/61. Cf. ORRRC Report No. 20, p. 11, p. 14 (Table 11), 88 sell a part or the whole of their personal time for income if they so wished, or that in case they should be unable to do so through the intervention of "higher forces" (under- time), they would then be sufficiently compensated. All social groups (except children) participating in OR--whether those in their training-Span of life (students, pupils, etc.), in their working-span, in their retirement-span, or whether housewifes--are truly confronted with a wage rate as a possible alternative return to their OR-time. Those in their training-span do not already sell their time, because through investment in their human capital, the discounted present value of their future income streams exceeds what they could earn 223! their opportunity-cost. The money value of their non-training time Spent in OR is therefore at least worth their present opportunity-cost, i.e., the wage rate they could earn in the market. Those in their retirement-span, assuming that they would physically still be able to work part of their time,121 do not anymore sell time, because they prefer 100 per cent OT. Their case is illustrated in Figure 4. If F0 = AK is their fixed retirement income, then the 121Even physical disability, however, would not prevent the existence of preferences for OT spent in OR over imagined, alternative ST (work) (cf. p. 87). 89 /\ H ’8. A o z m Eg ‘L F A. q x o M K / TIME \ . Figure 4.--The sold time-own time model: a 100% OT-preference. retiree, not selling time anymore in the market, is at equilibrium A. ‘If MK is the OT spent in OR, then we see again that its money value is at least worth P The W' same analysis can be applied to other people, not selling time in the market, but who receive fixed money incomes, irrespective of whether they work or not (the leisure class). It is debatable whether it is realistic to see children who are not in their training-span, as being con— fronted with the market wage rate. Remembering the days of child-labor during the Industrial Revolution, we may be tempted to an affirmative answer. Even though present laws generally forbid the employment of children below a certain 90 age, we may assume that even in case these laws were non- existing, children would refrain from selling part of their time in the market. Their case could therefore be treated like that in Figure 4, where income AK now takes the form Of the subsidy granted by parents, orphanages, etc. Only in the special case when children would prefer selling part of their personal time, instead of spending it in OR, :4 would or analysis not hold. "WI-5' Finally, we have to distinguish the case of house- ‘ wifes,122 for they represent the rather peculiar case of peOple, who work without being usually directly and fully paid for it. They don't sell time in the market, because the imputed income they earn through household work probably exceeds what the market offers them. If these housewifes Spend time in OR, then the value of this time must be at least worth this imputed income to them and as the latter exceeds the possible market income, we are back to our general result that the OR time per hour is worth more than the alternative market wage. G. The single money wage rate P of Figure l W already implies that we are assuming here short run static or comparative static situations and constant returns to 122Part-time housewifes. i.e., those who partly sell their time in the market and who partly perform the functions of a housewife, need no special attention, because they are truly confronted with a wage rate. 91 hours of work. We are interested primarily in the value of time pp a certain date, but are not, in this context at least, interested in the changes in: the preference structure, the OT-ST composition, P and the size of income W . 123 over time. H. As decision and planning period for the alloca- tion of OT-ST, the year is assumed to be most appropriate. This assumption seems to be justified in view of the employee Obligations arising out of labor contracts, which usually are not intended to be written for shorter than annual periods and also in view of the annual recurrance of all different sized OT-ST intervals. The appropriate time budgets or periods, in relation to which consumption allocation decisions are made, will be different for different groups of goods. The present OT-ST allocation decision, which involves such goods or intervals as vacations of several weeks duration, cannot therefore be seen in relation to a time budget shorter than one year and not longer than one year, because of the general annual recurrance of vacations. I. We have defined sold time as personal time per period actually "sold," spent, exchanged or used for the 123These aspects have been developed by Gordon C. Winston, "An International Comparison of Income and Hours of Work," The Review of Economics and Statistics, XLIII, N0. 1 (February, 1966), 28-39. . . See also J. D. Owen, The Price of Leisure, op. Cit. 92 earning of money income and own time as total personal time .per period minus sold time. Further clarification of this distinction will show why we prefer the ST-OT distinction to the customary labor-leisure dichotomy (cf. footnote 9). a. Is the simple readiness to ("Arbeitsbereit- schaft") and presence at work,124 the travel time to and from work to be regarded as work time or not; is the daily coffee break part of leisure time or work time? These are some confusing difficulties which for our purposes are really unnecessary if we adopt the more neutral concepts of OT and ST. Under the latter dichotomy, the deciding criterion now is not whether "work" was actually performed or not, but whether time was actually "sold" for money income or not. A third concept: Paid Time (PT), defined as the personal time (OM) for which money payment is actually made--where PT ; ST--may help in clarifying this criterion. Paid Time can be greater, equal, or smaller than Sold Time, in most cases will tend to be greater than Sold Time by the amount of fringe benefits, holiday-vacation pay, 124Arthur Nikisch, Arbeitsrecht, I, Bd., 3. Aufl. (Tfibingen: J. C. B. Mohr, 1961). ' Paul Bobrowski u. Dieter Gaul, Das Arbeitsrecht lm_Betrieb (Heidelberg: Verlagsgesellschaft Recht u. Wirtschaft, m.b.H., 1965), 5. Aufl.. Alfred Hueck u. Hans Carl Nipperdey, Lehrbuch des Agpeitsrechts, 1. Bd. (Berlin u. Frankfurt a.M.: Franz Vahlen), 1963. 93 sickness pay, "paid" leave, etc. If PT > ST, the time difference will be part of OT, i.e., the time of sickness is still "own" sickness time (nobody can be sick for me) and hardly could be called "leisure,' at least, if it is an involuntary kind of sickness and no malingering. If ST > PT, as may be the case when the travel time to and from work is not paid and is not regarded as a good in itself by the individual and when the employer has to defer wage-salary payments or is illiquid, the time difference will be included as part of ST.125 b. The concept of Sold Time refers directly to the market nexus (i.e., "selling"), which above all has to be the decisive criterion for any such distinction of time in economics. Work time or labor time-~while it makes up undoubtedly the major part of sold time--occurs also in non-market contexts and therefore 232 be a part of own time. In fact, for some people (certain artists, intellectuals and others) the nonwork-work (leisure-labor) dichotomy does not really exist, although they must, in 125Both cases would modify our Figure l to the extent that we should draw an additional budget line, lying parallel below MER by a horizontal distance of (ST-PT), to which an indifference curve will be tangent at the intersection point of line EK and the new budget line. For simplicity, we have omitted this second budget line from our model as the conclusions of our analysis would thereby not be affected or changed. Cf. Leon N. Moses and Harold F. Williamson, Jr., "Value of Time, Choice of Mode, and the Subsidy Issue in Urban Transportation," Journal of Political Economy, LXXI, NO. 3 (June, 1963), 247-264, for a graphical presentation. 94 order to survive "sell" some time by, e.g., composing Operas, painting portraits, writing essays, etc.: In these healthy people we find duty and pleasure to be the same thing, as is also work and play, self-interest and altruism, individualism and selflessness.126 (2) Equilibrium Solutions There is still another way to help in clarifying the understanding of our OT-ST terminology. Under assumption E above, we have already mentioned the actual deviation possibilities from the desired (planned) equilibrium position E in Figure 1. Let us therefore picture the individual starting his working year with a definite time plan in mind, a plan which takes very specific and concrete forms in the case of dependent work: the labor contract or law listing quite unmistakably the amount and distribution of work hours (length of the work-day or week, number of paid vacation days, etc.) and which is less specific, at least formally, in the case of indepgndent (professional) work, although even an independent craftsman, for example, usually has a quite definite idea, Often habitual, about the normalcy or unnormalcy of his work time, an idea, which is oriented along work hour legislation lines and the general trend of the market. 126Abraham H. Maslow, Toward a Psychology of Being (Princeton: D. Van Nostrand Co., 1962), p. 153. “fl?" -£. at E as therefore the planned or desired equilibrium under the given wage rate constraint P The exchange of KM 95 The indifference curve Illl at point E in Figure 1 can be thought of representing this plan, and equilibrium W' hours of sold time for EK ( = 80) dollars of income, would bring the individual to the highest attainable level of satisfaction I I l 1' Any actual changes of this planned ‘ equilibrium at E would be considered by him as being In unnormal disturbances of equilibrium-~unplanned, exceptional cases--for which special provisions have to be made through special overtime wage rates, unemployment compensation, etc.127 Should "actual" time sold extend "over" the 127Empirical evidence for the U.S. shows that: "Other things being equal, persons who usually worked long hours were far less likely to receive premium pay--only l in 4 persons as compared with over half of the workers whose usual workweek was 40 hours or less. This may result from the fact that extensive and recurring overtime tends to be concentrated among workers whose occupation or industry is exempt from legislative or contractual regula- tions governing the payment of premiums for overtime. In each occupation and industry, however, those persons who usually worked overtime and those who worked very long hours were least likely to receive premium pay (chart 1)." (Special Labor Force Report, No. 57: "Long Hours and Premium Pay," from the Monthly Labor Review (September, 1965), Reprint No. 2472, U.S. Department of Labor, Bureau of Labor Statistics, p. 1; my emphasis). In other words, if overtime is "usual," if it more or less becomes an expected, normal phenomenon, it tends, in terms of remuneration at least, not to be considered as real overtime. The equilibrium at E may therefore include some of this "normal" Overtime. Only if overtime is unusual or unnormal, will it be shown by an extension of ST to the left of E. 96 amount indicated by E or K, it would be regarded as "over- time" by the individual128 and should alternatively, actual sold time be "under" the desired equilibrium amount at E, "undertime" (unemployment) would result. In other words, all time to the left of E is overtime for the individual if actual ST exceeds desired ST and all time to the right of E is undertime for the individual if actual ST is less than desired ST. Normal equilibrium time is therefore that time which is neither "under"- nor "over"-time in the true sense of the words over and under. If ST? and ST? stand for the planned (desired) sold time and actual sold time of the individual (I) respectively, this can be expressed formally by the following inequalities: a. If ST? > ST§, the time difference will be undertime, i.e., unemployment time, lay-off time, involuntary sickness time, etc. b. If STE < STi, the time difference will be "overtime" in the true sense of the word. h—‘ 128 This implies that overtime in the eyes of the employer may not necessarily coincide with overtime as seen by the employee. 97 For the case of dependent labor, this normal equilibrium notion can be refined when we include in the analysis the employer as the "buyer" of ST together with the previously defined Paid Time concept. Let ET: and ET: represent the planned (P) and actual (A) time "bought" respectively by the employer (E) from the individual (I), and let PT?, PT?, pTg, PTE, stand for the actual and planned Paid Time (PT) received or paid, by the individual (I) and the employer (B) respectively, then we can first Of all derive the following identities: A A a. STI _ BTE’ _ A b. PT _ PTE' The accompanying matrix table (Table 1) summarizes all other conceivable constellations between the defined concepts. Among other things, it shows that there are several ways of expressing (through inequalities) the concept of overtime KNT) and undertime (UT)--in the case of overtime we have, for example, extracted eight possibilities. The equalities, of course, always hold true under normal equilibrium (NE) conditions. 98 Ii. y We m m A.” «.KSOV I A. NPR. .uo. .h v W H. . k .— usmA in. «A «5.9. H.a . H wt: WIS 3 SEE ”EA 1.5 a H wrmx mew Q «uzuo WE ... is ”they was“. 9. mum.&wc<>.wnt «.56.. m n . ~ H w: A why, an SAPSWE v who 3L is v in use as fixes Acpzozv Mkw v MAO «N .Ammuv wLAA ”Ln «4.3"» H.R. A wkm a be Couscous u its wsd v wen 9 «m2 no when wkm «mat nuke u who. WETTLVUC». H F: WW. NE . . .. . ..w “060 _ km) . wooed Your: u .E: . . anemia 04.45 I a d a. o . . «Adria can 3.3.9.“ «.thfxoxKEOCwq I NJ mam: «V dbfl. V WI .5 Mag 1.?» u. ALA“ .011w: «v ”TE. V “km Amtuv «to... £352... 03 arisen»: mo “mo .2 e3. u u .4 . . - u H . u u . H . . . I1 YE; cwsctku ML. Aggro LANA tkm ...3 V TEA TE. mobs V ..de “A WK xi $2.an .. Em mine who.“ mph «m2 ..c ......K ... mus «mat wk u .15 vsohq Ecol u ..a fidfiJADOntJttdq « . . . Qtdcwdufibfiiifimt d . . . 1.5.5939 .fd « on. . . «G d w»... ii _ u H at a an: .2: Sean u . $2..Ev.~. uu estrus . t5 “Mo O ikmv .Lm X 5.3; wk v «.5. it.“ “Hats 1. w nexus ..HKV ME 9.5 O a l W H. . ~ . icuEMaREutgo... mo ESL LANA chm. 3A «To “EA wsw .833 wt: mew 3:..EL ”EA New Web 55 m 2.68 .I. m2 - m I H mctumgozzu .2: «m2-» ...5 I in «wzuc «.5 u mum. «wzuv we..." mum «m2 «V wk u ”Ln urolcl u OJ «3.20.4.8 Amopsorwwitnmhxemaximiiudnt H Stained: . H . I . n +QNELOWUQ .WmVuV wkmv ”km «mohsouv (kw.v ”PW 4(tnv («A V airm, mcwmflkw.mwmmw chm “finance—av kav wkm xcm. Vietnam... 9mm «04 . Aunt: 04H . .w «9%. 04 H .Ammuw uiA Hkm «Amway HkgA Hk.m ”Fm. +c~E>cQ 3533‘“ at wimauv WhmA “kw hiw‘cuv (FWA «km .3 any (FAA mIW .... a. m a H I H I EMB+CMW¢V u ”0‘ \WZHV ”Fm." WFW NWZMV “Fm H WFW NM? NV {PK ..u MHFW fimzuw Wuhan n ”VFW “w? Iv LFRI kHFW “ Paints: mum 3.5 ..c “km A use ..O «.5 wk MK .mpmwosoo med» pmswmmp mo waHMZII.H Honda 99 (3) A Diagrammatic Demonstration Through the discussion of the assumptions, the elaboration about the own time-sold time distinction and about the concept of a desired or "normal" equilibrium, we have cleared the way for a direct and full exploration and manipulation of the model, which, as we said, is to show Pw to be an acceptable weighting factor for the determination of the money value (price) of individual human time. For this purpose the diagrammatic method of presentation will be most suitable. From Figure 1 it is already obvious that the money value of individual or personal sold time is SO (= ER), or that the money value per hour of sold time is P It W0 must therefore be now our task to show that PW can also serve as a money weight for the rest of the annual time period, i.e., for the own time (OK). Let Figure 5 be based on Figure l and let KKl represent a fraction of OT which may be leisure time, or more specifically, time spent in OR. Erecting a vertical line on Kl we see, that under the given money wage rate P our individual is wise not to work (sell time) during wl the KK1 period, for the additional income (GN) he thus could earn would surely be less than the subjective value of this time period KK which is at least (NF) dollars; 1! or alternatively, were the individual forced to sell the 100 A I; wr a, 1 I1 I; K.‘3 R R, r: E 3 L m n e\ (S Is 5 . N E 11 1% )JWWE 0 K1 K1 K M Figure 5.--The sold time-own time model: the own time surplus and overtime wage rates. KK1 hours at PW' this would lower the level of satisfaction below that indicated by indifference curve 1111' i.e., the individual would be worse off (than at E) on an indifference curve (not shown) passing through G. 101 The difference between (NF) and (GN), i.e., (CF) is so to speak an own time— or, in our case, an outdoor recreation surplus for the individual. The reason why our individual in Figure 5 does in fact not work during the KK time period, 1 is precisely because this time is worth more on the margin (i.e., GF dollars, at least) to him in own time uses than ‘ . in the possible sold time (work) use. Moving point K1 eastward and close to point K, so that the KKl difference 2 reduces to just one hour (not shown), we see that the money value of this hour of OT is at least P i.e., W' exceeds PW by an own time surplus which increases at an increasing rate as we move westward from K, thus mirroring through indifference curve IlIl the increasing relative scarcity of OT. This result should not puzzle us at all, for we know that overtime wage rates are generally higher than normal wage rates to compensate, among other things, for 129 this OT-surplus, so that the individual (after overtime u—._ 129This compensating effect of overtime wage rates is complementary and does not substitute for what we may call the discouraging effect of overtime rates. In fact, the original purpose of overtime rates as stipulated, for example, in the United States Fair Labor Standards Act (FLSA) of 1938, was "to discourage the employment of any one person for more than 40 hours per week, in order to create additional jobs." (EncyclOpaedia Britannica, op. 935., p. 804.) Moreover, overtime rates are instruments of social Policy, intending to keep the extent of overtime at a necessary minimum, in order to avoid adverse health effects which may be caused through excessive work. (Cf.P. Bobrowski and D. Gaul, op. cit., p. 140; A. Hueck and H. C. NiPPerdey, 0p. cit., p. 275; cf. also footnote 66. 102 work of KKl hours, for instance) is at least as well off as he would be at his revealed preference point E. Figure 5 shows that payment by the employer of a money premium amounting to (GF) dollars for overtime work of KKl hours, would bring the individual back to his indifference curve IlIl at F. dollars for KKl hours of overtime in the form of an over- OVT2 time wage rate PW , could induce the individual to work However, paying the same total amount of (NF) ‘1 only KK hours of overtime, as there is an indifference curve I212 tangent to the overtime wage line PEVTZ which indicates a higher level of satisfaction as that 2 at L, 111. By paying overtime rates instead of 130 overtime premiums (lump-sums, bonuses), the desired represented by I KKl hours of overtime would only be worked by the individual, if the employer paid him a still higher (than PW W ) overtime wage rate, such as P Equilibrium at K3 on indifference curve I3I3 would represent this situation. 130This result is analogous to the familiar dif- ferential impact of excise versus income taxes and demon— strates that overtime bonuses would be economically more efficient than overtime rates. (Cf. T. Scitovsky, op. cit., pp. 65ff., Figures 18, 19.) There are numerous German labor-court cases in which this rate vs. premium conflict had to be resolved. The problem is known as the "Pauschalierung" (lump-sum payment) of overtime compensation. Cf. A. Nikisch, Op. cit., p. 347, footnote 92; P. Bobrowski and D. Gaul, op. cit., p. 141; H. D. Rewolle, "Die Uberstundenpauschale, 225 Betrieb, Nr. 51 (December 19, 1956), pp. 1209-1210; and H. Meissinger, "Pauschalvergutungen im Arbeitsrecht," BEE Betrieb, Nr. 19 (May 9, 1956), pp. 448-450. 103 The case of a paid vacation, i.e., when PT > ST, does not change our results so far obtained but only ‘ reinforces them. In Figure 6 the distance EEl = MQ represents the vacation pay for the OT-vacation period LLl. Thus vacation pay has the effect of increasing the area of attainable combinations by the triangle EElN, thereby shifting the individual to a higher indifference curve 1212. The overtime premium would in this case amount not i only to NF but to ND. The same analysis can be applied to other fringe benefits. /\ I. 11 R D L4 Z n g F n\ Q_ §x E4 r\ N :5, E __ M 4'2 I4 'HME o 1.1 L. K > Figure 6.-—The sold time-own time model: vacation pay. 104 We are here abstracting from another possible hypothesis, which sees the choosing individual as being confronted not only with a single money wage rate (ex ante), but with several (overtime) wage rates per job simultaneously. In such a case, there would be one or several ki2k§_in the wage line, shown in Figure 7 below, and equilibrium would /\ I4 Rf," I3 R . g 1) E2. 3 W \ I m 2. A {S _ i3 E1 Ii W \ L 7’w \TI 5 0 z v Q 5 ’ M Figure 7.-—The sold time-own time model: the "kinked" wage line. 105 now not be unique anymore, but would be established twice (or several times), if there is, e.g., an indifference curve like Illl in Figure 7 which is tangent to the line segment of PW at El and tangent to the line segment of OVT ‘ . . . PW at E2 Simultaneously (ex ante) and not ex post as in Figure 5. (Figure 7, showing three different (inter- secting) indifference curves should not confuse the reader as each curve corresponds to a separate case (situation) discussed subsequently. The three cases are all treated in one diagram only to economize the latter.) The indi— vidual would work in this case 05 hours at the normal OVT wage rate Pw and ZV hours at the higher overtime rate PW , while VQ plus OZ number of hours are reserved as own time. There exists empirical evidence that this is a possibility under tight labor market conditions. The fact that many employees under union contracts "get time and a half for Saturday work and double time for Sunday work regardless of how many hours they labor during the regular wggk (my emphasis)," accounts for the preference of absenteeism during regular week days and work during overtime periods. "Thus if a man works Monday through Saturday, he gets 6.5 days pay; but if he takes off Wednesday and works the rest of the week, he gets 7.5 106 days pay for six days‘ work."131 VQ in Figure 7 represents this absenteeism time. Indifference curve I I which is tangent to the 3 3 P3VT line at E2, shows the possibility where an individual himself delibertely chooses132 overtime of ZV hours at OVT W and VS hours of normal sold time at the normal rate PW.133 wage rate P 131Kenneth G. Slocum, "I'll Be Out Today--Rise in Absenteeism Plagues Firms Already Hurt by Labor Pinch; Envelope Maker Pays Bonus for Perfect Attendance; Other Concerns Get Tough; Sick- or Hunting New Jobs?", Wall Street Journal, (June 6, 1966), p. l. 132The own choice of overtime by the employee him- self runs, however, counter to the general rule, that overtime wages have legally to be paid only if the employer gives the order, i.e., the employer and not the employee is the choosing and deciding agent in this case. (Cf. Dr. Jobst Gumpert: "Bezahlung von Mehrarbeit und Uberstunden", Gutachten; Der Betriebsberater, Heft 12, (April 30, 1961), pp. 487-490, espec. p. 489). 133According to the German weekly Die Zeit ("Eine Uberstunde", Jan. 18, 1966, p. 14), more than 90% of the employees of a great W-German retail enterprise have agreed to work one hour per week as overtime at a special high overtime rate. This proves the existence, however exceptional, of the E2 equilibrium possibility. Further- more, numerous newspaper advertisements in the U.S. for skilled workers often explicitly state the hours of work and thus the possible overtime hours implicitly, at times even the overtime hours themselves. This may also be interpreted in terms of the E2 equilibrium situation, i.e., as an indication that the worker has a choice to determine the overtime hours himself. 107 Indifference curve 12I2 illustrates the separate case and possibility where the individual prefers to sell only SQ hours of time, which is below the point V, from whereon time is officially counted as overtime. In this OVT W to work overtime, as his chosen sold time is VQ hours short I' 1 situation, the given P could never induce the individual of the ST limit, beyond which overtime is paid. Our previous result that Pw is an underestimate of I.- ._. ' Jul-311' L the money value of OT would, however, even under these exceptional cases of Figure 7 not be changed, as the OT- surplus to the left of E and/or E2 would continue to exist. 1 In Figure 5 we assumed (GF) dollars to represent a sufficient premium, which added to (GN) dollars, should make the individual as well off as he would be at B, were he not to work the KK hours as overtime. 1 This finding, however, can only be true if the distribution of own time at Kl' i.e., the frequency, size (duration) and sequence of own time intervals was the same as that at K, or if the individual was sufficiently com- pensated for a changed distribution of OT at K by the 1 (GF) premium, i.e., that the OT-distribution implied at point F along indifference curve IlIl coincided with the actual OT-distribution associated with the KKl hours of overtime demanded by the employer. This fact, that underlying any point along the distance OM and underlying indifference curve Illl is a 108’ certain distribution of time, usually is not noticed in the economic literature at all, or is at most only implicitly assumed. Sold time and own time are not continuous blocks of time, as might be inferred from ourdiagrams, but are summations of interlocking_ST and OT intervals of varying duration. Underlying equilibrium position E in Figure 5, for instance, is a particular distribution of these intervals. Going back to Figure 5, it is now clear that the distribution of OT/ST at F cannot be the same as that at E, for either the number of ST/OT intervals must have increased/ decreased, or at least some of the same number of OT-ST intervals must have been shortened and lengthened respectively. A third possibility consists in a combination of the two previous possibilities. With the above definition of the distribution of time, indifference curve Illl in Figure 5 must have been drawn under the implicit assumption of a changing distribu~ tion of OT/ST intervals along its course. Thus point F expresses not only the taste of the individual, i.e., that with NF dollars of additional income and KKl hours of additional sold time, he is as well off as at point B, but it expresses also a particular taste for a particular 109 (different than that at E) distribution of OT-ST.134 If, in our example, the distribution of the overtime ST—intervals (which add up to the KKl hours of Figure 5) demanded by the employer does not coincide with that distribution implicit at point F or K1 and if the individual is pep indifferent as between the two distributions, then even the payment of ‘q the GF dollar premium could not make the individual as well off as he would be at E. In such a case, indifference '1 curve Illlll in Figure 8 below would take the place of V IlIl - both curves now representing equal levels of utility (0), but different distributions of OT-ST for any given amount of total OT—ST hours along OS. The employer would have to induce and "bribe" our individual with an additional premium of FH dollars to change his OT—ST distribution preference at F or K and thus to bring the employee's desires 1 into balance with the employer's needs.135 AS an example 134The degree of convexity (steepness) of the indif- ference curve and therefore the required premium will depend upon labor market conditions: the tighter the market, the higher will be the premium which has to be paid, i.e., the steeper will the indifference curve be, cet. par. (Cf.: "More Workers Gather Nerve to Switch Jobs As Labor Gets Scarcer", Wall Street Journal, 1966, p. 1; Cf.: Frederick C. Klein: "Pay vs. Play — Firms Offer Employees Double Wages If They Give Up Some Vacation", Wall Street Journal, May 24, 1966, p. l). l3SIf the premium is paid in form of an overtime wage rate (PQVT), (not shown), i.e., a straight line connecting E with H - this rate would suffice to induce the KKl hours of overtime only, if the wage line happened to be tangent at H to indifference curve I 1111; otherwise, even a still higher overtime wage rate would have to be paid. (Cf. ftn. 130). 110 /\ I4. I R H 77.. F ‘2‘ 6 8 2 n; f‘ E {S M N 1% l a I. \ 0 K1 K 5 ,TIME Figure 8.--The sold time-own time model: income compensations for inferior ST-OT interval distributions. take the case where the employee is supposed to work the KKl hours overtime as a 221E during a weekend, while he would much prefer to distribute the saga amount of overtime evenly over the work week--a preference which indifference curve IlIl depicts at F or Kl' In other words, our 111 individual prefers the same amount of own time in large, continuous (weekend) blocks, instead of in small pieces.130 136There are several reasons why usually (for con~ stant total amounts of OT) continuous, large blocks (clusters) of OT are preferred over scattered, small pieces of OT: i. Working overtime in the form of an extended work- day saves an additional work-trip, usually involved in weekend work. ii. A larger variety and number of different (time- complementary) activities can be pursued if the own time span available is relatively long rather than when it is short, because of the greater profitability of transportation investments (money and time), because of seasonal, day- and night rhythms, physiological conditions and other reasons. The individual's choice is expanded and thus his welfare increased, if his activity/consumption time horizon (budget) of OT is less often interrupted by ST intervals. The fact that Sunday and holiday overtime (or vacation "pay—in-lieu") rates are in general higher than weekday overtime rates, may partially account for this inferior distribution of OT/ST entailed in Sunday or holiday work. For the double— time pay experiences--which are sometimes capped with an additional bonus--of several U.S. companies, Cf.: Frederick C. Klein: "Pay vs. Play-—Firms Offer Employees Double Wages If They Give Up Some Vacation", op. cit., p. l. Demosc0pic evidence shows that of a sample of 1030 West-German and West-Berlin employed laborers, 18 years and over, who were confronted with the choice of either working the standard 48 weekly hours within 5 days with a free satur- day, or of distributing the same number of hours through shorter work-days over all 6 week-days, 73% preferred a free saturday (and thereby a longer weekend) through longer weekly work-days, while only 20% voted for 6 work-days with the associated shorter daily work time and 7% were undecided (Gerhard Schmidtchen: Die befragte Nation-~Uber den EinfluB der Meinungsforschung auf die Politik, (Freiburg: Verlag Rombach, 19597? p. 39). This general preference for short work—weeks and long weekends, may, however, disobey and be not in accordance with the advice coming from medical research. A. Hittmair's pioneering sport-medical investigations, e.g., demonstrate. . . that the six-day-week is still the best and most natural regarding the present living and working conditions", because of a . . ." negative phase of neuro-vegetative liability". . . which just occurs on the (third) day after a 2-day weekend ("blue monday"). "The prolonged weekend cannot therefore bring genuine recuperation". . ., as. . . "relaxa- tion and recuperation are conditions which take some time to get underway". (Anton Hittmair: "Wissenschaft vom Urlaub", Mfinchener Medizinische Wochenschrift, 101. Jg., Heft 31, July 31, I959, pp. 1329-1333). qm_v 112 (4) Disequilibrium Situations A. Deviations of Actual From Desired (Planned) Sold Time Up to this point we have operated under the assump- tion of either a normal equilibrium, i.e., that actual and planned (desired) ST and OT coincide, are identical, or that even when undertime exists, OR-Own Time is still preferred to work (ST). Under assumption B (see IV,l) we, however, already stated that in order to show the validity of our OT-money—value-contention—more specifically our OR-time-money-value-contention--we need only assume that in the case where actual ST hours are less than the desired ST hours of equilibrium position E (undertime), i.e., a part or the whole of OT is undesired, either some form of extra compensation for this "undesired" deviation is found, or that the individual would not prefer to work (sell time) during his OR-time, even in this undertime situation. We will now demonstrate the soundness and general validity of this less restrictive assumption diagrammatically in Figure 9. i. If actual ST should exceed desired ST - as may be the case when standard work weeks, forced labor, etc., prevail—~apd_if no extra (above PW) compensation for this "overtime" is paid, the individual, 323$ a "leisure preferrer", can be represented to be in a position like that at G in Figure 9, KK measuring the excessive ST. We 1 ‘L'.~=— .Amfiflpum>onwfiflunwpcsv wSau om Scum Hasnom mo mCOflpmH>mp "Hobos mfiwu czonmfiwu UHOm mnena.m.mnmwam Umuflmmp e W AX x x J. n mZFA x o 3 d“/ N t D H h d VH v2 I .rH / 3 x/ u nH L O 1... E m M w J m .2 w v.0 fl 2%: d v H ?H H If 114 see, that an indifference curve IZI2 must pass, through G lying pelpw_llll, the desired (planned) level of satis— faction, which the individual pppld attain at E, were he not pressured or forced to sell more time than he really wishes (overemployment). The individual wishes to sell only SK number of hours, but actually sells SKl his actually sold time exceeds his desired sold time by KKl hours. There is in this situation, however, no doubt that PW, as before, is a minimal weighting factor for the derivation of the money value of the leftover own time OKl' Let K3K1 stand for that part of own time which is spent in OR, then it is again obvious that GlNl--even in this disequilibrium situation——is an underestimate of the value of K3Kl hours of OT, for FlNl>GlNl would be a measure of the value of this OR-time, i.e., a PX>PW would be the money value per hour of OR-time. In other words, even if we should go along with the critics who maintain that the individual cannot really freely determine his hours of ST or OT in the downward direction (Cf. ftn.lO9), i.e., that he must sell more time than he really wishes to, our previous conclusion continuous to be true. ii. The answer to the situation where the desired ampunt of ST exceeds the actual ST hours (undertime), i.e., where the individual would like to sell more time than he actually can, SK exceeding SK2 by KK2 hours in Figure 9, is hours, i.e., .... .....- . 115 more complex. Here the individual is an "income preferrer". Being able to sell only SK2 hours instead of the desired SK hours means that the individual's actual position is at 'point W on indifference curve I212 in Figure 9, i.e., he is again worse off than he would be were he able to achieve "normal equilibrium" at E along indifference curve 1111' ‘_ Our diagram shows that he would, therefore, be willing or prefer to work for the whole or part of the KK2 hours of _3 undertime at wage rates even below PW, like at wage rate “1 P$, but at and below no wage rate such as P%, the wage line which is tangent to IZIZ at point W. Were the individual able to work, for instance, K4K2 hours at P$r bring him to the higher indifference curve I313 at point D. would also be this would All points between K and K? at wage rate P; preferred to the original situation at W, but would be points on lower indifference curves than I313. A; point K or H he would be indifferent to situation K2 or W. All wage rates appye P; would induce the individual to sell more than 8K2 hours. A; the wage rate P: he would prefer to remain at W and at wage rates EEiEfl.P% off by choosing more (than 0K2) hours of own time. he would be better If we let K4K2 stand (for illustrative purposes only) for that part of total own time (0K2) which the individual spends in OR, this time is now, in the undertime situation, worth to him at least AJ dollars, which is CJ dollars less than its value at wage rate P Alternatively, W. 116 our individual would only accept work for K4K2 hours, even in this undertime situation, if he were paid an income of at least AB dollars, because point B is indifferent to point W and because the K4K2 hours in the form as leisure have an own value (reservation price) for him of at least AB dollars. U81ng PW as the money weight in the case where the | individual is in an undertime situation might137 thus oygg; estimate the true value of own time or OR-time, unless, as we shall see later on, he is fully compensated for his ' being forced in the undesirable undertime situation. Our model shows that unemployment OT (a form of undertime) is of lower value than normal OT, as the individual would be willing to forego this undertime OT at wage rates 2 138 less than PW.but not below PW. 137Even in an undertime situation, PW may still be the correct weight as long as the OR—time is not part of the undertime, i.e. if the time distance K4K2 is 55ft of the own time to the left of E; for this would imply that the individual, although unemployed, still prefers the K4K2 hours as OR-time over work, i.e., he does not participate in OR to just "fill" the undertime gap. 138J. D. Owen, in a different context, assumes "that in times of less than full employment, the market price of the leisure of employed persons will be less than the average wage rate paid, and that the differential will rise with the unemployment rate" (p. 63). Our model-analysis comes to the same conclusion. Whether the "differential will rise with the unemployment rate", will, however, depend upon the preference structure of the individuals, i.e., upon the slopes of the various indifference curves between leisure and income. For instance, undertime at K2 is obviously greater than at K4 in Figure 9, which is another way of saying that the unemployment rate at K2 is greater than that at K4. To determine whether the reservation price or own value of OT (leisure) per hour at K4 is greater than at K2, we have to observe the slopes of indifference curves passing through C (not shown) and 117 Own Production Up to this point our analysis implicitly assumed that only by selling time in the market would the individual be able to generate (money) income. This assumption, however, has to be modified for those individuals who in addition are able to generate income as own producers, are, so to speak, selling time to themselves. In the present context this means that there may exist a lower limit to the number of hours by which desired ST may exceed actual ST and which is determined by the productivity of the individual as an own producer, i.e., by the skill and opportunity to generate income or goods in a non-market context. In Figure 10 below we have modified Figure 9 so as to show these possible Robinson Crusoe aspects of our individual. W, respectively. Although indifference curves to the left of W seem to have a steeper slope if they are almost parallel (which would support Owen's argument), it is nevertheless conceivable (yet as we think exceptional), that the indif- ference curve at C is less steep than the indifference curve at W (which would contradict Owen's argument). We agree, however, with Owen in that it makes more economic sense, that an unemployed worker will be ready to sell his time at increasingly lower wage rates, the higher the degree of unemployment, expressed in undertime hours, if there exist no compensations (Cf. IV,4,A) for the undesiEEble situation in which he finds himself. John D. Owen, "The Demand for Leisure", Journal of Political Economy, Vol. 79, No. l (Jan./Febr., 1971), PP. 56-76. =— “29“.”. ‘2}. 118 .upoonponm :30 "ampofi mafia cBOImEflu paom mzell.oa mnsmwm O III-ll. Ill-I'll I'll"! I'll Ill I‘ll l m> INCOME (Y) 119 SUVO represents the own production possibility block or curve of the isolated individual whose trading ties to the labor market have been severed, e.g., through Va temporary lay-off. Assume that he has a choice of either being his own producer, pg of actually selling only 8K6 hours of sold time (by working, for example, only one third of his normal daily working time) to his employer for WK6 dollars of income per year.139 Then, as our Figure 10 shows, he would prefer being his own producer, because through this choice he could attain indifference curve I which is tangent to his production block at point U, — 515 i.e., trading SK4 hours of work with nature, so to speak, for UK4 dollars of imputed income, - and which lies above indifference curve I616 on which he would be at point W, were he to accept the alternative of reduced daily ST hours. This assumes, that for the individual under consideration, "own time"—work and sold time-work are in no way different in his utility function, i.e., that possible differences in the distribution and in the utilities/disutilities of time used in own production (being one's own master) and sold production, leave the individual indifferent. Otherwise, indifference curves I 15 and I616 would be comparable only 5 with further qualifications. 139Later on we will treat the case where he does both, i.e., being his own producer and selling time in the market. ‘I if m“ 120 If the actual time which the individual could sell should amount to SK5 hours, he would be indifferent between own production and sold production, as U and Z are situated on the same indifference curve ISIS‘ For all points lying to the left of K he obviously would prefer sold production 5 to own production. For an individual whose own production block is rather flat, like SVlO in Figure 10, the point of minimum acceptable sold time would lie to the right of K6, but would not coincide with S, at least as long as some own production possibilities exist. For more productive own producers, represented, e.g., by the SVZO production block, the acceptable sold time minimum would be located to the left of K6. Should the return from own production exceed the return attainable through the labor market over the major part of OS - like production block SE1V3O - it is apparently more efficient for the individual, quite independent of tastes, to select a point of equilibrium such as E on 1 indifference curve I7I7 and along the "higher" curve of attainable combinations SElV30, than to move along the "lower" budget line RES.140 In many areas of economic development this latter case is not at all unlikely, when wages are relatively low and own production possibilities in the agricultural sector relatively abundant. 140Cf. K. Lancaster: "A New Approach ° ° °"' op. cit., p. 146. 121 Perhaps a more realistic situation is depicted in Figure 11. Here we assume that the individual is not con— fronted, as he was in our analysis of Figure 10, with the either—or choice (i.e., of either being an own producer, or of selling time to the market exclusively), but we assume now that he is able to deal with his undertime situation by actually selling SK hours in addition to his own produc— 6 tion, i.e., that he is able to supplement his own production (sold production) income through sold production (own production) income. This can be shown graphically either by shifting the own production block SUVO of Figure 10 to the left by a horizontal distance of SK and upwards by a 6 vertical distance K W, so that its origin (nose) is trans— 6 ferred from S to point W, p£ starting with the own production block, by letting a ray R1U2, parallel to RS, emanate from U2, the latter point representing the equilibrium position for SS4 = K4K6 hours of own production. The ray RlUZ must pass through point U so that (SS4)+(S4K4) = (8K6)+ l’ (K4K6). Figure 11 assumes furthermore that the dimensions of the production block remain unchanged after its move to W (only the segment FQNL will be lost to the realm of £92— attainable combinations), i.e., that own work, being now performed between or before/after the ST intervals totaling 8K6 hours, remains as productive as under the previous assumption of no interrupting sold time when own production was chosen. This assumption is, however, made only in order r‘) . .COAuosponm Eso msam main pHOm "Hence 9.5» gonwfiflp CHOm unsuitg musmwm m. ..m, .2 ..x X f G o mrEA‘J 3 «H an d rH 2 m IIIIII Ju _ _ u _ _ _ _ 2 z IIIIIII LN IIIIIIIII s n t M a? JVCOME (Y) 123 to simplify the diagrammatic exposition and therefore does not represent a necessary condition, i.e., the production block could be flatter or steeper than before, without changing the substance of the conclusions to be reached. Although the own production block, through its origin transfer, has lost its "big end" FQNL, the remaining pro- duction possibilities represented now through the shorter ‘ block WNQ, to which indifference curve ISIS is tangent at E U1, shows that the individual has improved his welfare by l' supplementing his disequilibrium amount of sold time 8K6 through own production of K4K6 = SS4 hours. Instead of being at point W on indifference curve I616, the individual has moved to point Ul on a higher level of satisfaction represented by indifference curve ISIS' ‘His £9331 income amounts to K4Ul dollars, of which K48 (=WK6) dollars are due to sold time equal to 8K5 (=K4S4) hours and of which the remaining BU (=S4U2) dollars are due to own production 1 time equal to SS4 (=K4K6) hours. Total income K4Ul is still UlC dollars short of income K4C which he could have attained, had he been able to sell the K4K6 hours in the market at P instead of using them for own production. Market imper— W’ fections (undertime) have reduced the "gains from trade". Own production, while it ameliorates the undertime situation, falls still short of the "gains from (labor) trade", which the market normally provides. If we continue to slide the production block with its "nose" along the wage line P in the north-west direction, W 124 keeping its base always parallel to the horizontal axis, we see that the tangency positions (like U1) between indifference curves and the production block, will occur more and more towards the "nose". This is explained through the increasing steepness (convexity) of the indifference curves as we move along their course towards the north-west, which limits the tangency positions with the production block also to its steeper portions, i.e., those towards the nose. At point E where the nose touches equilibrium, no own production will occur at all. This is as it should be: the own production income supplement will tend to be greatest, the greater is the undertime, i.e., the more we move away from normal equilibrium E along RS towards point S and it will tend to be zero at the point of desired eqiulibrium E.141 To the left of E, own production would take the individual only to lower and lower indifference curves, at least as long as we continue to consider the exclusive goal of own production to be the provision of an alternative (own) income substituting or supplementing activity. ‘— 141The private garden plot or allotment, which permits some own production, can be a cushion against emergencies such as an (unemployment) undertime situation, in addition to its psychic returns. 125 Once the desired equilibrium at E has been attained by the individual, this does however pp£_necessarily imply the absence of any own production, for own production can and probably will consist also of productive activities whose aim is not that of an alternative to sold time activities or of a supplement for an unnormally low ST-income - as there is DOW (at equilibrium E) no need — but whose aim consists predominantly and exclusively in the production of "psychic income". Many of the multiple household do-it-yourself activities fall into this category, but also any other own time activity, OR included. We may picture this situation in terms of a psychic-income-production-possibilipy-block ERZM, which will have to lie to the north-east of the money budget constraint P and to the north-east of the "physical" W (material) own income produc:ion block ENlM. The individual's actual position will be somewhere along R2E, probably to the south-east of point R although the desired equilibrium 2' will tend to be located at Ru, the maximum psychic income level. The individual seems to be continuously on the way towards his goal R (R2 is like a magnetic pole towards 2 which the individual is pulled), will, however, at least during one lifetime (but perhaps upon reaching "nirvana"), never reach R because there is always still a sufficient 2' amount of negative psychic income, i.e., dissatisfaction, own "bads", lack, scarcity (nothingness), etc. around, all 126 of which consume own time too, in fact, to a certain extent, the latter seem to fulfill a rather necessary function, for how else could we perceive our positive psychic income goal, were it not for the negative psychic income, which unceasingly separates us from the goal? Of course, psychic income units cannot be directly compared with money or good income units. Point H, for example, cannot be considered as a point on a higher (than IlIl) indifference curve, but only as a, in psychic income possibility space, blown-up illustration of point Hl on indifference curve IlIl, i.e., as an explanation why the value of KKl hours of own time is worth more than just the wage equivalent ZX. After this rather lengthy, but as we shall see necassary, excursion into the realm of own production, let us return to our main argument, from which, for the time being, we will, in order to simplify, exclude the possibility of own production. gpdertime Compensations We left our main argument with the postulate, that even in an undertime situation PW may continue to serve as a minimum money weight for the determination of the money value of own time, if either the particular amount of OT (e.g., OR time) whose value has to be measured, is not part of the undertime, pp if the individual is fully compensated for the undesirable undertime. We will now 127 show in detail three main possibilities of undertime compensation: 1. It is a likely possibility that the "individual in undertime" will receive unemployment compensation or unemployment insurance benefits. If in Figure 9 our individual at point K2 (or W) should receive WW1 dollars exogenously from his unemployment insurance or from some benevolent institution/agent, this would bring him to indifference curve IlIl at W1, where he is as well off as at E. Unless he distinguishes sub— jectively between income received from work (ST) and income received from his insurance, e.g., when a dollar earned through work is worth more (or less) to him than a dollar received from insurance,142 points W1 and E can be interchanged, as they are on the same indifference curve 1111, and we obtain our earlier result, that to the left of E own time is at least worth the Pw —wage rate equivalent per hour.143 It is probably realistic to assume that the 142We will here not analyze the case where a stigma (discount) is attached to the receipt of insurance benefits and where work incentives are influenced, as this would not change the substance of our argument. See: C. T. Brehm and T. R. Saving: "The Demand For General Assistance Payments", American Economic Review, LIV, No. 6 (December, 1964), pp. 1002-1018. 143Furthermore, we are here abstracting from the fact, that unemployment time is usually an imperfect kind of own time, because the freedom to use this time according to own wishes, is often severely restricted through the legal requirement, demanding that the registered unemployed individual has to report personally and periodically to the "employment-office", in order to be able to cash in the unemployment compensation. 128 WW dollars will be sufficient to compensate the individual 1 for the undertime, if KK2 is only a minor portion of annual personal time and if the undertime is of a non-recurring nature. For if the total unemployment compensation would amount to about 50%144 of the usual income which the individual would have earned in the absence of undertime, i.e., one half of KE, our diagram indicates that it would be a full compensation. 2. A further compensation possibility has also been discussed by L. N. Moses.l43 If the individual were able to work K4K2 hours as overtime in Figure 9, at the special W>PW' he thereby could reach indiffer- ence curve IlIl at Q, where he would thus be as well off as at E. (That the individual, if he could, would like to overtime wage rate P work more than only K K hours of overtime, can be seen 4 2 at L where P; is tangent to a higher indifference curve I4I4). Here too, PW could be maintained as a valid money weight. The same result could have been reached, of course, also with fewer than K4K2 overtime hours, when the overtime wage rate was greater than P; number of overtime hours, if the overtime wage rate was and with a greater than K4K2 lower than PW' but not lower than PW' 144 In Germany, for example, unemployment money (Arbeitslosengeld), since the lst of April 1967, amounts to 62.5% of the net income of a single person (Cf. General Anzeiger, Bonn, February 18/19, 1967). 145L. N. Moses, op. cit., p. 329, Figure 4. 129 In this connection, we have to mention a rather interesting form of overtime compensation, which in colloquial German is known as "Abfeiern". It involves cases, where overtime is worked but is "paid" for not in terms of the customary overtime wage rate, but in terms of additional own time (leisure). This we show in Figure 12 below, where it is assumed that the individual is paid a premium of KKl hours of OT as a compensation for changing his OT-ST distribution through overtime work, i.e., the individual may one day, e.g., work overtime for 2 hours and during the next day work "undertime" (shorter hours) for 3 hours, but be paid the normal wage rate for the standard number of hours on both days. The overtime premium thus consists in the additional hour "earned", or alternatively, his "Paid Time" exceeds his "Sold Time" by one hour.146 In Figure 12 this means that the individual ends up at point P on a higher (than 1111) indifference curve 1212. Unless the distribution of OT-ST implied at F is inferior to that implied at G, FG dollars of income could be subtracted without making the individual worse off, or, making him as well off as at E. The conclusion is that although actual sold time (=SK1) is less than desired sold time (=SK), the individual 146Figure 12 can also depict the case of absenteeism from work, when KKl stand for the time of absenteeiSm. 130 A I: I1 a 75.; ‘2M E F 3 5 F}. H 3 12 I. TM 0 K K4 5 :5 Figure 12.—-The sold time-own time model: own time as a compensation. nevertheless may attain an even superior I212. As G and E are points on the same the money value of OT per hour cannot be general preference of leisure-lovers for overtime compensation over the customary level of satisfaction indifference curve, below PW' The this method of overtime-rate method, demonstrates that individuals really seem to reach "higher" (than Il I1) levels of satisfaction. 131 J. Gumpert147 concludes, that this method of overtime compensation is also superior to the payment of a money premium or the customary overtime wage rate, "because it serves the purpose of work-hour regulation, i.e., to protect the health of the employees, that much better".148 3. Besides the above "overtime in undertime" compensation possibility we have to mention finally a third compensation situation, which may arise if the individual is an own producer, i.e., if he can make use of the additional own time for the production of own produce (income). Going back to Figures 10 and 11 by inserting into Figure 13 below the individual's own production block WU NV, so that its "nose" coincides with W and its base 1 lies horizontal to the time axis, we see again that the individual has improved his undertime position of KK2 hours, through a movement from indifference curve I212 passing through W, to indifference curve ISIS, which is tangent to WUlNV at Ul' Doing more than K4K2 hours of own production work, in addition to 5K2 hours of sold time work, would only bring the individual to lower than ISIS indifference curves. The slope of indifference curve IZI2 at W.(=P£), probably will be less than the slope of 147J. Gumpert, op. cit., p. 490. 148Cf. also: A. Nikisch, op. cit., pp. 347-349; P. Bobrowski/D. Gaul, op. cit., p. l l. 132 .COHUMmchEoo mEeunmpgg mm COHUUSCOHQ czo "HmpOE wEHu CBOImEfiu paom mceil.mH mnnmflm W Ax ex Mx x My;hA o 3 .V. 3 ea. NH 3 lllllllll I I. lllll .l .I > [1 I N llllllllllllllll 14‘ TIIIIII.F / Tl/ MH 3 / «e v V: F ,rH 2 v \/ UK M Wax v I E m 2 w /m&\ r C 2 m. m fl vH mH H 133 indifference curve ISIS at Ul (=Pg), because of the increased convexity of the indifference curves to the left of W and because of the non-intersection requirement; however, it need not be less. Points U and H are both points on 1 indifference curve ISIS° If we tried to induce the individual to work the remaining KK4 hours of undertime by paying him a wage rate indicated by the line PaiPé, the individual could at the maximum receive TlJl dollars of additional income, which would, however, be JlH dollars short of the amount of income needed to make him at least as well off as he would have been, were he to stay at Ul or K4, i.e., at wage rate P3>P2 he would definitely prefer not to offer w— w’ the KK4 hours or any intermediary amount for sale in the labor market. Expressed differently, KK4 hours, or any amount in between, are worth more to the individual in the form of own time if the wage rate does not exceed PW‘ Even though he is in an undertime situation, the individual would not accept work at any wage rate, for P; is so to speak his reservation price of own time, which through own production, will approach PW' if P£>P£. We may there- fore conclude, that, assuming PW to be the minimum estimate of the money value per hour of own time, even in an under- time situation, may overestimate the true monpy value of OT by less, if we allow for own production. As P; probably is greater than PW’ and as the individual has brought himself closer to IlIl through the movement from IZIZ to 1515' we also see that own production of K4K2 hours has partially, 134 compensated the individual for the undesirable situation in which he finds himself. There even exists a possibility of full compensatipp in the case where the individual is a highly productive own producer. For should his own production block be of the size WE V in Figure 13, to which indifference curve Illl 1N1 is tangent at B it is obvious, that at equilibrium El’ 1' with K2K5 hours of own work, he is now as well off as he would be at E and our postulate about the money value of . . 149 own time remains unshaken. For a very unproductive own producer, represented, e.g., by production block WTZNZV in Fig. 13, it would be preferable not to engage in any own production at all, as any indifference curve intersecting the WT2 section of the block would be on a lower level than 12 2, on which he is situated at W when he does no own work. 149People who are able to switch from industrial wage or salary employments back to the agricultural sector, in times of unemployment, like the children of farmers who return to the farm to "trade with nature" again, may enjoy a compara- tive advantage over those, who have no opportunity to till the soil on their own. In highly unstable economies, like many of the development countries, it may therefore be a wise and economically efficient decision, not to sever ones ties with the agricultural sector completely, so that in times of need, the reemployment possibility remains open. The frequently observed division of work time between the industrial and the agricultural sector in deve10pment areas of the world, may be so motivated and may thus be explained also in economic, in addition to the customary sociological (family ties, etc.) terms. 135 Twentieth century "Industrial Man" probably happens to be in such a situation,150 where it turns out to be really not worth his while to engage in any own production, because the return would be so low in comparison to the return from other uses of the same (under-)own time. Here, P; would, as we saw already in Figure 9, be the reservation price of the own time not sold. A fourth compensation possibility may be seen in the simultaneous existence of 2 or 3 of the previous compensa— tions. The payment of unemployment compensation, plus some overtime wage rate, plus some own production,151 tOgether, is more likely to, but need not Eplly compensate our "undertime" individual, than the existence of only ppp compensation methOd separately. B. Unexpected Short-Run Disturbances and Other Alleged Causes Under part A. above, the deviations of actual from desired sold time were shown to be deviations between an unmoved, unchanged, i.e., constant desired normal equilib- rium at E and a flexible actual amount of ST lying either to the left or to the right of the desired equilibrium point E. We have now to concern ourselves with the 150Excepting those who own farms, sufficient garden allotments, etc. 151The following compensation pairs are conceivable: a. Undertime compensation plus overtime wages, without own product., b. Undertime compensation plus own product., without overtime wages., c. Overtime wages plus own product., withOut undertime compensation. 136 possibility that both desired and actual ST may vary during the course of a year. The ST-OT plan, which we assumed to exist in the mind of the individual at the beginning of the period (year), may incur unexpected adjustments and revisions during the period under consideration. This can be the result of a host of environmental factors, such as: weather changes, climate, family tragedies, accidents, etc.,152 but can also be due to the individual's change of mind.153 152 As an illustration, take the case of an individual who loses his brief-case containing his monthly salary. He may consequently forego his planned vacation OT to make up for this loss. Here we have a case, where the normal equilibrium position is moved to the left of E, while actual and desired ST-OT remain identical there. The situation would be different, if somebody desired to sell less time, but is unable to do so, because of contractual ties, e.g., when the weather turns out to be too beautiful and the disutilities of work therefore become excessive. In this instance, actual ST would exceed desired ST, because of the environmental disturbance (Cf. ftn. 12). 153In fact, the increased flexibility and freedom in the choice of the number and distribution of ST hours, which professionals, managers, independent workers and others, more or less "enjoy", creates a built-in disturbance. No wonder therefore that the usual overtime compensation practice does not apply to these "independents", but is restricted to a large extent to contractual and dependent work (Cf. ftn. 127). The relative size of the income of independents almost assumes and implies that they work on the average longer than the majority (Cf. A. Nikisch, 0pY cit., p. 350). There exists conclusive evidence that the average weekly hours of the self-employed or independents are longer than those of the "dependents" (Cf. e.g.,: "Selbstandige arbeiten linger", Die Zeit, May 24, 1966, p. 13; "Der Traum vom eigenen Geschaft - Der Selbstandige kennt keinen Sieben—oder Achtstundentag", General Anzeiger, Bonn, August 20/21, 1966; "Arbeitszeiten der Erwerhstatigen", Bulletin des Presse-und Informationsamtes der Bundesregierung, Bonn, March 30, 1966, Nr. 44, p. 351). 137 In Figure 9 these short run plan disturbances could be thought to be represented through movements of point E or indifference curve 1111 along the budget constraint SEG. The result of our previous analysis of part A. would, however, not be altered through this possibility, as only ,the money value of the final, actual OT has to be measured here. Variations in the money value of OT around Pw have been alleged to be due to another reason. Specifically, it has been argued, that the opportunity cost of time presumably varies: considerably among commodities and at different periods. For example, the cost of time is often less on week- ends and in the evenings because many firms are closed thenl, which explains why a famous liner intentionally includes a week-end in each voyage between the United States and Europe. 2(See the advertisement by the United States Lines in various issues of the New Yorker magazine: 'The 8.5. United States regularly includes a week-end in its 5 days to Europe, saving [economic] time for businessmen' (my insertion)). The cost of time would also tend to be less for commodities that contribute to productive effort, traditionally called 'productive consumption'. A considerable amount of sleep, food and even 'play' fall under this heading. The opportunity cost of the time is less because these commodities indirectly contribute to earnings" (G. S. Becker, op. cit., p. 503). In the context of OR, Anthony Scott (op. cit., p. 33), e.g., argues that: Wage earners will seldom be able to afford visits during their work week. Hence, most of their visits will be on days off or weekends, when their income— opportunity cost will be close to zero. 138 . . . For perSons with a relatively larger independent ('unearned') income, the opportunity cost of income may ber zero. On the basis of our model these statements obviously can hardly convince us. They imply either that people really would like to work (sell time) during "week-ends" and evenings, but are hindered from so doing by forces beyond their control, pp that these outside forces are not the result of the preferences and choices of individuals, with whom they can agree or identify. We know, however, that "holi(y)-days", Sundays, "free" OT evenings, etc., did and do not usually come into being through distatorial and undemocratic decisions, but we know that they are the product of a multitude of social-political-religious forces expressing the - often silent - preferences of majorities. The reason why most people do not work during Sundays or evenings is not because there normally is a lack of opportunity to work for income during these periods, or because the pppp_of finding a suitable second or third job for these periods is excessive (to the contrary, there exists today even a shortage of people willing to work during holidays, Sundays, etc., and relatively higher wage rates/salaries have to be paid to attract enough people into these occupations), but because these people, reflectively 139 or unreflectively, prefer it that way.154 The 5—day work week with its "free" Saturday, is not the outcome of "higher“ forces, but is the most obvious expression of the conscious demands for own time of a majority. Firms are usually closed in the evening and on week-ends, ultimately, because people prefer it that way. G. Becker's and A. Scott's arguments would thus be of relevance in this context only if the individual considered week-ends and evenings as part of undertime, with the further restriction that even in this case when actual ST is less than desired ST, the money value of OT must not, as claimed, necessarily as was shown under be below the wage rate equivalent PW, part A. above. Moreover, it is doubtful whether the decisions of businessmen, of which liner to take to Europe, really depends upon the kind of time—cost saving mentioned by G. Becker. For if these businessmen were really such extreme time-economizers or savers, they probably, i.e., not necessarily, would take the much faster plane in the 154Restaurants, e.g., which could stay open even during holidays and Sundays, are often deliberately closed on some holidays/Sundays (to the often great dismay of hungry customers), and we know that people who actually work during Sundays/holidays/evenings, have their "day-off" (morning or evening off) at some other day during the week (Cf. A. Nikisch, o . cit., p. 341). Own time periods generally are chosen (except in undertime) and are not somehow forced upon individuals through a shortage of work opportunites. 140 first place and not the boat. The fact that they neverthe- less may go by steamer, is evidence of the more realistic observation, that the ocean journey is enjoyed as a leisure good as such, or offers a welcome combination of work in a recreational environment. With respect to this point there are even more magazine advertisements to be found, trying to lure the prospective customer with the colorful aspects of the luxurious life on board,155 and which invite especially .the businessman to establish his work-office on "deck" by providing him with the necessary room and communication facilities. 155Cf., e.g., the American President Lines Advertise- ment in Saturday Review, entitled: "Take The Time, Take The Ship". The advertisements of railways (Cf., e.g., the advertisement of the German Federal Railway: "To win the day at night in the DSG sleeping car" (Nachts den Tag gewinnen im DSG-Schlafwagen), Die Zeit, March 24, 1967, p. 53), trying to induce people - for whom the sightseeing — and other values of travel are not strong - to travel at night, have, in principle, no other aim than to permit people the saving of day-time - not because night-time is valued less than day-time, but because it is assumed that individuals usually would have slept anyway at night and that therefore the simultaneous, double consumption of sleep and travel increases the effiEient’use of7their time. The rate differential between day and night travel (sleeping car travel is more expensive than normal and equally com- fortable Pullman car travel) might be taken as an under— estimate of the value of the time saving achieved. 141 If the businessman (on land) usually does not sell time during the weekend, because as we saw, he prefers it that way, i.e., the OT is at least worth his wage rate per hour, the opportunity cost of time (on sea) cannot be con- sidered less (than P ) during this period. The quoted time W saving advertisement of the liner must therefore be under- | stood differently: The reason behind the decision of including a week-end in their 5-day trips to Europe, is not because "the cost of time is often less on week-ends", but because it minimizes the number of sold time days fore- gppg by passengers to Epggquays. In the choice between liners to Europe, the one which includes the week-end in its trip—schedule, may be preferred, because it 232 save two days of sold time, if the week-end would have been used for leisure pursuits on land anyhow. Furthermore, the opportunity cost of the remaining 3 days foregone, may be reduced or eliminated through the offer of work possibilities on board. By stressing, in addition, the leisure—luxury atmosphere, the passenger liners are thereby prudent enough to offer the best of two worlds to their customers ' gimultaneously: to those who might stay away because of the loss of ST (the work inclined), they offer an attractive schedule and on-board work facilities, while those who are more leisure inclined are attracted by the emphasis on the vacation-while-travel luxuries, which may transform a previous conception of a week-end plus 3 wasted days of 142 travel, into a to be consciously enjoyed extended leisure week—end of 5 days — the latter being then preferred to and being worth more than the foregone earnings. It goes without saying, that the double attraction must be even stronger for passengers who are ppEp_work as well as leisure inclined. What concerns the opportunity cost of time used in "productive consumption", we have again, by following the logic of our model, to dispute the conclusion reached by G. Becker. We have already shown (see ftn's. 118, 119) that most people spend a certain amount of own time in sleeping, food consumption, etc., not because they have no other choice (nobody forces us to exist), but because they consciously or unconsciously prefer it so in their particular situation. This time is thus valued relatively higher in "productive consumption" uses than in ST uses (for "existence" reasons), and the opportunity cost of this time cannot there- fore be less than PW per hour. In fact, we can be quite sure that this time will never be part of undertime and therefore possibly worth less than PW per hour. Alternatively, as long as the individual decides to live, the reservation pgip§_per hour of his existence minimum of leisure time, OEx in Figure 11, will at the limit become infinitely great, as is shown at the point where indifference curve 1111 becomes tangent to the vertical line erected on Ex, i.e., the individual might be induced to sell ExKl hours of OT 143 at increasing overtime wage rates, but would under the above "life" assumption, never sacrifice his existence (—basis) even if he could become infinitely rich.156 In our "Theory of the Production of Time" (Appendix A), we demonstrate that the "productive consumption" time or existence minimum of leisure is part of the direct cost of time in general, a portion of which (i.e., produced time) is then allocated for the "production" of money income, while another portion is spent in the production of "psychic "157 income. Productive consumption therefore does not only indirectly contribute to the subsequent money earnings, but al§p_indirectly contributes to the subsequent psychic earnings or satisfactions (and dissatisfactions). Just because this productive consumption time is so productive, for non-money earning time (OT) as well as for money earning time (ST) and thus forms the baSis for all time, it will as we saw have the highest reservation_price and will therefore not be worth less than PW per hour. It is irrelevant for 156This is not to deny the possibility that some- times the indifference curve, especially of parents, still shows a negative lepe at the border of the existence minimum Ex. The case is not seldom that parents overwork and overexhaust themselves through excessive work, in order to secure financial independence and/or satisfactory bequeSts for their children. The common saying that somebody "works himself to death," implies that the price of working ihto the time existence minimum OEx often has been premature death. 157 . . This is not to say that work may produce no psychic income in addition to money income. 144 the valuation of own time (including OEx of existence minimum leisure), whether this OT contributes to "productive" money earnings or "non—productive" non—money earnings--these are only reasons explaining why time was spent this or that way in terms of differing rates of money- psychic returns—-all that matters at the level of choice is that continued existence and continuous ability to work, i.e., the use of a certain amount of time for productive consumption, was preferred to its use in possible work for money income, and the ultimate possibility of death. Finally, the statement by A. Scott about persons with large, "unearned" independent incomes is clearly wrong. As long as these persons gap or are able to sell part or the whole of their personal time, but actually refrain from doing so, their own time mus: be worth more to them than what they could earn on the market by selling it and the income opportunity cost cannot be zero, unless the market wage rate is zero. At the extreme, where points E and S become identical because indifference curve 1111 is tangent at S (not shown), we can see that the opportunity cost of OT nevertheless remains. 145 (5) The Effect of a Different Distribu- tion of Own Time--Sold Time (The Time Distance Approach) We have seen that, given certain assumptions, the money value of OT per hour, in general, lies above the wage rate P foregone. How much above P the value of this W W 'OT lies cannot be said a priori. The only thing that is certain from a look at indifference curve IlIl of Figure 14 below is that as we move, starting from point K or E, westwards towards the origin 0, the "surplus value" of the remaining OT increases at an increasing rate, as is shown through the vertical difference between the constant budget line, whose negative slope is P and the indifference w! curve IlIl° If the individual works overtime for a certain amount of personal time to the left of E, the money value of the £g§p_of the OT should be higher than the overtime wage rate, per hour. In the situation where the individual, for instance, is able to choose a certain amount of overtime like KK6 at an overtime rate P represented by the line FE in OVT' Figure 14, thereby reaching a higher indifference curve 1616’ we could infer that the remaining amount of OT, i.e., K5K6 (abstracting as indicated from the existence minimum 0K5) is at least worth P T per hour, or that one 0V hour of own time K5K6 is worth more than POVT' Probably (A) BHOJNC 146 R E. \\ § \ M I. 3., TIME 0 K5 K6 K; K 5 > ( Ex) the Figure l4.--The sold time-own time model: value of OT after overtime. 147 more realistic and general, however, is the case, where the individual is in a disequilibrium situation of "undertime in overtime," i.e., where the desired hours of overtime KK6 exceed the actual hours of overtime KK7 in Figure 14. Here, the individual would end up at H on a lower (than I616) indifference curve I7I7 and we see that the money value per hour of remaining own time K5K7 is 1333 than POVT’ as the overtime wage line FE intersects I717 from above. No specific and absolute money value (above PW) can therefore be attached to own time intervals even in an overtime situation, unless we assume that the individual either has a free choice in the selection of his overtime hours in addition and after (ex post) the fulfillment of his normal equilibrium at E, 25 is in a position along FE to the left of E where the 1’ actual amount of overtime exceeds the desired amount KK6. We have seen furthermore, that one of the possible reasons why increasing amounts of income must be paid for the successive sacrifices of OT to the left of E is, because of the possible inferior distributions of OT-ST intervals, i.e., because changes in one or several of the three pOSSible variables (XOTI Intervals; ZOTI = Number of OT~Intervals; and SEI = = Average size of OT- Sequence of OT-Intervals) which determine any particular distribution of OT-ST intervals (=DI), may be considered as inferior by the individual. In what follows we will try 148 to say something in more or less hypothetical form about the variations and graduations in value among the OT- intervals above their per hour minimum value P variations, wl which are mainly due to "distributional" reasons. We will thereby abstract from the OT which is part of the existence minimum OK in Figure 14, because from all OTI's which 5 are summed up in the distance OK in Figure 14, those OT— J1 intervals (OTI's) which are part of the existence minimum OK5 (sleep, rest, etc.) must needs, as we saw, involve the highest (even infinite) OT-surplus, as long as the individual decides to live. More difficult is the problem of passing judgment upon the value of the pgpp of the OTI's in Figure 14 (KKS), i.e., to decide whether, for instance, a day of OT which is spent in the form of OR is valued relatively higher than a day spent relaxing at home, etc. Everything else constant, we postulate, by making use of the Law of Qiminishing Marginal Utility or its more general form, i.e., the Law of DiminishingpMarginal Rates of Substitution or Law of Variable Proportions~-to say that the comparative values (above PW per hour) of recurring and non-recurring OT-intervals per period (for an individual), whose size (duration) differs sufficiently from that of other OTI's 149 to be able to classify them as differentls8 are a function of the frequency of their occurrence per period, their relative size, as well as of the time distance (TD), time s an, intervening period or interim period, separating successive occurences of OTI's, i.e., their sequential arrangement per period. For example, a two or three week vacation OTI usually occurs only once or twice during the year, with a relatively long (frequently half a year) time period separating, e.g., the summer vacation from the winter vacation; on the other hand, a two day week-end OTI occurs not only much more often during the same period (year), but the intervening non-week-end time-distances are obviously much smaller. We may therefore expect, cet par., an individual to value a unit of time of his chosen vacation OTI relatively higher than the same time unit in the form of a week—end OTI. An analogous relationship we postulate to exist, e.g., between week-ends and holidays, vacations and holidays, etc.159 158Cf. hereto the empirical methods of determining jpst-noticeable-differences (j.n.d.'s) of physical stimuli, of the famous Weber-Fechner Law of psycho-physics. 159For non-working individuals (the leisure class, children, retirees, a.o.), i.e., people with 100% Own Time per period and no Sold Time, the postulated value dif— ferentials between week-ends, holidays and vacations, may vanish, as OT now occurs as 923 continuous interval per year and as there are now no finite TD's separating OTI's from STI's anymore to make OTI's distinct intervals. In 150 In another context we already observed that, in general, Sunday or holiday overtime rates are relatively higher than workday-evening overtime rates. This rate differential can be explained by the postulated higher preciousness which a less frequent and farther apart spaced Sunday or holiday OTI (or unit thereof) has for the individual in comparison to a more frequent and closer time-spaced evening (or unit thereof). In other words, there are a lp£_of evenings per week, but only 923 weekend and I may thus be more willing to sacrifice a part or the whole of something of which I have a lot per period, than of something which I may have only once during the same period.160 Column 4 of Table 2 gives us, as an example, the frequency per interval size of the annual OTI's of an individual. For example, there are two OTI's in the 80-90 hour group and also two OTI's of 110 hours each. In terms of frequency alone, a comparison of their relative value fact, Sundays and holidays mquthen be valued relatively less than week—ends, because of a shortage of (time-) complementary activity possibilities on these days (stores, libraries, etc., are closed, etc.). 160This is quite independent of other non- distributional reasons, which may make overtime as a continuation of the normal work-day preferable to the same amount of overtime worked during a week-end. An obvious example is the additional cost of the work-trip, which may be saved if overtime is worked as an extended work-day (cf. footnote 136). 1511 TABLE 2.—-Prequency of major ST—OT interval sizes per year of a representative worker. (1) (2) (3) (4) (5) (6) (7) Interval size no. of ST Total No. No. of OT Total N0. Tetal No. Total No. (duration) Intervals of ST Intervals of OT of Inter- of(ST+OT) in hours(days) per inter- hours per psi inter- hours per vals(TI) hours per val sizo interval size interval per inter‘ interval (Frequency) size (Frequencyl size val size size (1)1(2) (1)~(4) (2)+(4) (6)2(1). k3)+(5) 4 1O 40 10 40 8 171 1368 171 1568 10 36 360 56 360 ,4 27 378 27 378 16 157 2192 157 2192 20 8 160 8 160 24 (1d.) 5 72 3 72 60 (2.5d.) 2 120 2 120 62 6 372 6 572 64 52 2048 32 2048 68 1 68 1 68 86 (3d.14h.) 1 86 1 86 88 1 88 1 88 110 (4d.14h.) 2 220 2 220 404 (16d.20h.) 1 404 1 404 568 \25d.16h.) 1 568 1 568 Totals: ZSTI-228 1900 ZOTI=229 6860 ZTI-457 8760 The equations far the weighted arithmetic means are: (2) S 3 COIN? X001. 2 - = 8053.. hours ZSTI 228 (5) 7 - Eleo1.(1)xCo1. (411,_ 6860 fi_ . CTI 2.0“ 229 ... 50 hours C ‘4) XTI - 2‘0010‘11100105b22 . 841:7 .190168 hours .ZTI Note: Interval sizes below 4 hours which may occur during the work (ST) period (rest intervals, f. i. ), are here omitted to simplify the analysis. 152 would therefore be impossible. Taking their relative size as an additional distinguishing characteristic, i.e., valuing the two 110 hour OTI's (or parts thereof) higher than the two 86-88 (or 80-90) hour OTI's,l6l would, however, be only justified if the time spacing of OTI's were necessarily and always positively related to their absolute size. However, as we cannot exclude the possi— bility that the two 110 hour OTI's may happen to be located timewise closer together than the two 86-88 hour OTI's, thus offsetting or even outweighing the previous size effect, it is therefore more correct and more inclusive to take the time span between the two pairs of OTI's as a third deciding characteristic, besides the frequency and relative size, to determine their relative 162 values. We can illustrate the time distance idea by Figure 15. Let the circle in Figure 15 describe a clock- disk for variable periods (i.e., not necessarily for a day period, but in this context, e.g., for an annual period) and let the distances A and A' along its circumference l6l§bTI, the mean of the distribution, could not be used in this context, because it refers only to the total number of OTI's per period, while we are here comparing a selected few of the total number of OTI's. 162The frequency distribution of Table 2 reveals . that the relationship between interval size and frequency 18 not symmetric enough (but double peaked), to warrant a possible substitution of the size variable for the frequency variable. .W-_ 153 Figure 15.--A time period with two OTI's and their time-distances. represent two OTI's of equal size (duration). Then, if we want to make an ordinal value comparison between A and A' (which is a different comparison than that discussed so far), their number frequency and their relative size obviously cannot now be relevant, because they are equal. We are thus left with the time diStance or interim periods X and Y as a possible distinguishing factor. Under the assumption that the value of equal sized OTI's varies according to the size of the time span between them, we hypothesize that in Figure 15 the value of both A and A', or parts thereof, tends to increase (decrease) the farther (shorter) A is separated from A', ceteris paribus, i.e., as we let A' move in clockwise (counter-clockwise) direction away from ‘W ’n “m”?!— 154 (towards) A and the observer is placed at point 1, a part or the whole of A's and.AVs value increases (decreases), cet. ar. For example, if there are two three-week vacation periods per year A and A', then moving A and A' closer together timewise decreases their value or part of their value. It is, as if the A (or A') OTI-horizon seen as a time budget were extended (shortened) through the tran- scending increased (decreased) proximity (distance) of the future (or past) A (or A') OTI, or as if the reduced (increased) time distance had created a greater plenty (scarcity) of own time and therefore as if the marginal value (utility) schedule for OT units, of the A-interval or parts thereof, had shifted downward (upward). In other words, the utility of homogeneous, equal sized commodities or intervals (A), is not independent of the time distribu- tion of past and future homogeneous and equal sized commodities or intervals: AMV t AMV t A A >0. t4Tt-l) > 0’ t-(t+l) ' ATD ATD ‘ ’i.e., the change in the marginal utility/value (MV) of good A at time (t) increases, if the time distance (TD) between the consumption of A in the past (t-l) and its 155 present consumption increases, cet. par. The same holds 163 for the future consumption (t+l). So far we have, however, looked only at one side of the coin, because the closer A' is located towards A time- wise and we observe the situation at A' after the experience of interval A, which now lies in the past, the greater will be the transcending or radiating force of the future, now more distant A interval (Y has increased by the decrease in X) on the present A' interval or time units thereof. Especially the value of the last units of interval A' will tend to exceed the value which they (units) would have attained had the time distance not changed, as the indi- vidual will now have to "wait" longer for the recurrence of the same consumption experience. The last days on a vacation, the last hours before a parting, in general, are usually regarded extremely precious and the preciousness will tend to be greater, the greater the expected time distance to the next reunion or consumption of the good, cet. par. Kisses tend to be longer and more intense, the longer the "kissers" were separated (in time and space) and expect to be separated from each other. The same will be true for the first time units of the reunion. 163The "economics of separation"yields very inter- esting policy conclusions. If a certain sum of money has to be distributed among the poor, Spacing the distribution in intervals per period, should tend, cet. par., to make the people happier than if the money were distributed as a once per period lump—sum payment. 156 When A' merges with A (i.e., when X reduces to zero), at least part of the time units-—especially the early ones-—of interval A' will probably be of less value than those at the beginning of interval A, or during interval A. In other words, the value of a present OTI of size A can differ, cet. par., from the value of past or future OTI's of equal size A--the value differential depending upon the proximity or distance of the experienced or expected neighboring OTI's of size A from the present A. The longer (shorter) the time separation between them, i.e., the longer (shorter) the present experience of the interval of size A is separated from its last experience and its next expected occurrence,164 the higher (lower) will it be valued, ceteris paribus.165 164Unexpected, transitory acts of consumption of A may be included in the form of a certain probability dis- tribution. 165It has been said that marriage partners tend to like each other relatively "more" after they have been separated for some time through taking vacations single, etc., cet. par. Varietas delectat (freely translated as: Variety is the spice of life) and abstinence, separation, partings, from homogeneous consumption experiences, obviously are able to enhance variety. Not only the actual or expected time separation of consumption acts does affect their relative values, but already the threat of time separation or partition influences the values of continuous consumption acts. At one extreme, we know that the threat of death of the other person--a death whose coming can never, or rather seldom, be predicted with certainty--and who threatens with the ultimate and maximum conceivable (infinite?) time separation between human beings (i.e., the loss of the physical presence of the "other")--transcends many 157 interpersonal, irreplaceable (love) relationships, by heightening the appreciation and valuation of the "other" while he is still alive. Death, or the threat of maximum time separation, thus has also often overlooked positive aspects. There may also be a tendency for certain consump~ tion experiences during old age to become relatively more valuable, as the expectation and the probability of their, recurrence decreases, i.e., it may have been the "last time" that one was able to consume a certain good (the TD to the next consumption experience of the good begins to approach infinity). This tendency should reinforce and support our Law of the Increasing Scarcity of Time (cf- III, 1). (The strong preferences for present satisfactions, ‘for the "Now," through which the present generation has been characterized as the "Now Generation" (see Time Magazine, January 6, 1967, p. 16), probably reflects the threat of increased scarcity of life, the threat of imminent doom, which a freely flourishing scientific (atomic) age-- an age which still has to grow up to find out where its limits are--has created.) Our TD-theory seems to support Bohm-Bawerk's theory according to which present satisfactions are generally preferred to, or are worth more than future satisfactions (goods) (cf. Bohm-Bawerk: Positive Theorie des Kapitals, 4. Aufl., Vol. II-—Excurse-~Jena 1922; cf. also: Alexander Mahr: “Gegenwart und Zukunft in den wirtschaftlichen Dispositionen der Konsumenten," Zeitschrift f. National- okonomie, Band XXVI, Heft 4, August 26, 1966, pp. 435-459.) The value of the present consumption experience of good A is the higher, the greater is the prospective time distance, for which present consumption might have to be postponed. Here it is the prospect, threat of a TD, or a threat of scarcity created through the prospective TD, which makes people realize the relative higher value of present consumption over future consumption. We should not be surprised to find that people attach immense value to very rare, unique and non-recurring consumption experiences per lifetime period, like weddings, confirmations, etc., because the expected TD to the next experience of the same good is by definition either very long, or infinite. For example, the value of a wedding for an individual should therefore vary depending upon its expected probability of recurrence or the probability that he may "consume" another wedding in the future-~a probability, which may be greater for a previously divorced person relative to a non-divorced person. It may also explain the self-prOpelling nature of many divorces. There is also something to be said, from an economists viewpoint, for an intentional, conscious time 158 (The fact that our human capacity to consume goods simultaneously is by nature rather limited and the fact that time can only be "produced" successively (cf. III, 1), separation of a previously instant or simultaneous con— sumption of goods: Eating the cake in separate intervals of time should yield a higher total satisfaction, than eating it all at once. Furthermore, varying, changing the TD's from period to period, should by increasing inter- period variety, eliminate or reduce the sobering monotony which would be associated with a complete uniform time distribution of goods from period to period (cf. A. Mahr, Op. cit., p. 459). The cake example shows how much our TD-theory is in agreement with, and gives an economic rationale to the old advice, that it is wise to keep within bounds, or to observe moderation (Mthalten). Even psychologists have lately learned, that personal (human) growth implies continuous, unceasing, little (inner) "own deaths" and "rebirths," i.e., partings and separations. Only at a distance does perception become complete (cf. A. Maslow, op. cit., p. 173, 190). Cf. Hermann Friedmann, op. cit., p. 372, especially footnote 1. Cf. Benedict De Spinoza: "Towards something future, which we conceive as close at hand, we are affected more intensely, than if we conceive that its time for existence is separated from the present by a longer interval; so too by the remembrance of what we conceive to have not long passed away we are affected more intensely, than if we conceive that it has long passed away." (Prop. X of Part IV of The Ethics; see, e.g.,: The Rationalists--Descartes, §pinoza, Leibniz [Garden City, New York: A Doubleday Dolphin Book, Doubleday and Co., Inc.), p. 331.) Interpreting the quOtation with reSpect to the present context, we may say: If the memory or expectation of the not too distant (past and future) consumption of good I is thus still alive/fresh and "close at hand," respectively, the present consumption of A will be subject to the forces of the Law of Diminishing Marginal Utility; but the longer the above diStance separates the present consumption of A from its past and future consumption, the weaker will be their (i.e., past and future's) intensity of affection on the present and the "newer," "fresher," "scarcer," and therefore relatively higher valued will be the present consumption experience of A, cet. par. 159 i.e., that we have to wait a certain time interval before the same consumption act can be repeated, must thus heighten the scarcity and valuation of the goods. Even if all goods were "free" goods, i.e., if all prices are zero, and even if lifetime were infinite, the necessary TD between two successive acts of consumption of goods—— which is either created through the intervening consumption of other goods, pp through the limited human capacity to consume simultaneously and instantly more of one or several goods--would affect and determine the ordinal time prices, to which the marginal utilities per unit of time must be proportional. In other words, the time price will be the actual amount of consumption time spent for the various goods and the time price per unit of a good will, cet. ar., be higher, the higher is the marginal utility per unit of the good, and the marginal utility will tend to be higher, the greater is the TD the good was separated from its last and will be from its next act of consumption. 'It follows, that the greater the TD, the greater will be the time price, everything else constant. Consumption can thus never stop throughout our lifetime, as we can never really catch up, as we are always distant from where, what and how we would like to be (cf. Ch. III, 1). More generally, we may say that the present experience and valuation of a good is determined not only by the last or next expected experience and valuation of _‘_ -mg ‘-— A. ... 160 the same good, but by past and future consumption experiences even further distant than the most immediate ones. "Ultimate situations" of past extreme plenty or scarcity Of a good mgy still exert an important influence on its present valuation, as many people who at one time have suffered great hunger, will even in times of affluence continue to consider a piece of bread relatively very precious and people who at one time during the past were very wealthy, but who have become relatively poor in the meantime (e.g., through wars, natural catastrophes, etc.), will feel the loss presently and in the future to be more severe, the wealthier they were during the past. The same will hold in case of expected future scarcity. This simultaneity or convergence of past, present and future within the valuation process, should be explored further (cf. the quotation from T. S. Eliot's "Four Quartets" in footnote 75).166 In Figure 15, we see that the comparative values of A and A' should be equal, cet. par., when we move A' to point 3, where they are equally distant. Equal time 166Price expectations, which basically are expectations of future relative scarcities or plenty of goods, undoubtedly do influence present consumer behavior, leading to the familiar hoarding of goods, shifts in the labor supply, etc. (cf. Milton Friedman: Price Theory, Op. cit., pp. 205-207). aim“. -mllI' _L . ' 161 distances between the consumption of a certain number of equal sized, homogeneous OTI's or commodities per period, should therefore also make their relative valuation equal, cet. par. Whether the value of A and A' is also at a maximum at point 1 and 3 respectively, i.e., whether A and A' are optimally distributed during the period, cannot be determined a priori, but will ultimately be decided only in terms of their valuation and relation to the totality (Gestalt) of all other non-A consumption experiences during the same period. We may conceive A and A' to be inter— twined within a highly complex polynominal and multipolar ~"Utilitprreath." Goods are therefore in this sense never really "independent" from each other and among themselves, but are related, in terms of valuation, in a particular matrix of time distributions, at least. This is the economic "theory of relativity." At point 4 in Figure 15, e.g., A'/s value (at least the value of the first units of A') might be thought to be relatively greater than its value at point 3, as the expectation of its experience was kept longer in the waiting by the time distance between 4 and 3. However, this increased separation-effect may have been offset or even outweighed by the increased proximity-effect of the succeeding OTI, A, which will tend to decrease the value of the last units of A' relatively to the value of the same last units of A' when at 3, and which will 162 also affect the value of the first units of A negatively, although the last units of A will in turn be enhanced in the next period through the increased successive TD to A'. There is a tendency for the (magnetic) pull of the future A to be stronger,167 than the ”push" of the past, when the individual anticipates, plans or expects to consume A and when he is actually in the process of consuming A, because he is not at rest, but is continuously moving towards the future and §w§y_from the past con- sumption experience of good A. In the latter case of actual consumption, two effects have, however, to be distinguished with respect to the future: a. There is the continuously shrinking TD separating the present moment of the consumptive act of A from its final, terminating moment (or "bite"), which tends to enhance (because of the increased proximity of the end of the present consumptive act of A, i.e., the increased scarcity) the value of the last, final units of A, and b. There is also the TD to the beginning of the £353, expected (future) consumptive act A, which continu- ously shrinks, as we consume A presently, and which should ‘ 167According to A. Mahr, 0p. cit., the joy of gpticipation (Vorfreude) increases, or is the stronger, the less distant in time the anticipated act of consumption is for the individual. 163 exert a dampening effect upon (because it somehow does reduce the scarcity of the present units of A) the value of the final, last units of A. However, in relation to the size of the shrinking TD of (a) above, this equally shrinking (b) TD will be proportionally smaller, the greater the TD between successive occurrences of acts of consump— tion of A. The effect of the increased proximity (decreased TD) to the next, future A, will thus not be as strongly felt as the effect of the increased scarcity of the final units of the present A. The net effect will thus tend to enhance the value of the final units of A presently consumed, and the increase in this value will be relatively greater, the greater is the TD separating the end of the present A from the beginning of the future A consumption experience. For example, if an individual were consuming only one meal per day, taking 30 minutes of consumption time, then the value of the meal units, of say the last five minutes of consumption, would be relatively greater, if the individual were only given the mean every other day (i.e., bi-daily), than if the daily consumption rhythm would continue. The size (duration) and value of the actual consumption time (i.e., 30 minutes) of good A must be seen in relation to the TD to the next (and also past, as we shall see) act of consumption of A. No wonder, therefore, that vacation consumption periods are usually quite long: the TD separating successive _ ...—flat.” ”I." I“ w ' l " . . ., .1 164 vacations is usually quite long too. There may exist an optimal proportion of TD's and consumption time for all goods: i.e., that the greater the TD's, the greater will be the consumption time (Cf. pp. 159—160, where we reached the same conclusion through a different line of argument), cet. par.--a "medial section' of consumption.168 Honey- moons, for instance, or "extended" visits with friends and relatives, are obvious examples of adjusting consumption time to finite and infinite time distances. The longer the time during which parents expect their children not to return home, the longer, cet. par., will the children, paradoxically (have to) stay at home.169 With respect to the influence of the past, the continuous movement away from the past consumption experience of good A in time, has also two to be 168This is also reminiscent of the Weber-Fechner Law of psychophysics, that: "greater length must be added to a longer line if the change in length is to be noticeable“ (Earnest R. Hilgard, Introduction to Psychology [New York: Harcourt, Brace and Co., 1957], pp. 7, 599; cf. also H. Friedmann, op. cit., pp. 90 ff.). 169For infinitely "distant" goods (unique goods, like the marriage love-project) and therefore infinitely valuable goods, one will therefore never tend to separate during our "finite" lifetime. The Believer, who is related ("married") to an infinitely distant God, thus to the infinity of God (who "consumes" infinity), within a "love-project," will, because God is infinitely valuable to him, never "let him go," never part with God, will continuously "consume" Him during his finite lifetime, for the "next" consumption may be in "eternity" (infinity). 165 distinguished effects, when the individual actually is in the process of consuming good A now: a. There is the continuous increasing TD separating the present moment of the consumptive act of A from its last (past) moments (or "bites"), which will tend to enhance the value of the present units of A, because of the increasing separation from the first unist of A, but as consumption is thus continuously occurring since the beginning of the present consumption act (the TD is not "empty"), this effect will through the resulting satiation be eliminated. b. There is also the TD to the previous (past) consumption act A, which increases continuously and which should therefore tend to enhance the value of the present units of A. However, this increase, seen in comparison to the total TD separating the beginning and end of successive occurrences of acts of consumption A, will be relatively smaller than the increase under (a) above. If we show in Figure 16 below (the) two homogeneous and A of equal duration (D), l 2 (whose ends and beginnings are separated by a finite time consumption experiences A distance Y, we see that the time distance Z1, e.g., amounts to a greater proportion (%) of the total duration (D) of Al than of the time distance Y. Alternatively, the TD (22) 166 ‘ I j I > STREAM (FLOW) l l I 1 OF7TN4E z 3 l ' I..- :D Y 22 7:13 46 A, A2 Figure l6.--The value of two homogeneous consumptior experiences and their time distances. amounts to a greater prOportion (%) of the total duration of A2, than of the TD (Y). The effect of the increased separation from the last A will thus not be as strongly l felt as the effect of the proportionally greater TD or separation from the beginning of the present consumption experience A (satiation). Both effects will, however, 2 here tend to enhance the value of the first units of A2 presently consumed, while the satiation effect of (a) will soon, after the first units of A2 have been consumed, take its course. Of course, the value of the first units of A2 will tend to be greater, the greater the TD separating the beginning of the present A (i.e., Y) from the end of the 2 previous Al consumption experience, cet. par. As before, when we considered the future extension, the size of the actual consumption time (duration D), must again be seen, now also from the past extension, in relation to the TD —--=-"—"“ “’z_ 167 to the previous act of consumption of A: the longer the children were separated from their parents, the longer they will pgpd to stay at home, cet. par., a.s.o. Furthermore, the influence of the past is not really restricted to the actual consumption process of a good in the present, but additionally supplies the present with a residue, remnant, which is called memory and which tends to be stronger, cet. par., the longer the duration of past consumptive acts was. The function which (the joys of) anticipation performs for future consumption acts, memory, in symmetrical fashion, performs pi past consumption acts. But as both memory and anticipation are united in the present moment, both_past and future must be united in the present (cf. p. 161). We know that not all acts of con- sumption, whether past or expected future ones, yield equal returns in terms of memory and anticipation respectively. It almost seems, that the more repetitive the acts of consumption are, i.e., the shorter the TD's separating them, the lower will also be the constribution to memory and anticipation, pet. par. We usually derive no great value from the memory of yesterdays' breakfast, as well as from the anticipation of tomorrows' breakfast, but the memory of our last vacation usually accompanies us perpetually, together with the anticipation of our next 168 vacation,170 and the latter memory and anticipation are enjoyable experiences in themselves, thus are valuable. Certain goods thus are consumed for periods longer than their "actual" consumption time, through memory and anticipation,171 in fact, some goods (weddings, graduations, certain OR experiences, certain "peak experiences" a la Maslow (op. cit.) and other "unique,' authentic experiences) never really stop being consumed during our lifetime. Our analysis leads us to the conclusion that there may exist something like an optimal consumption selection, i.e., he will have led a "rich" life, cet. par., who has concentrated his consumption and activities on "goods" with relatively great memory and anticipatory yields. The materialist, who has become a slave without knowing to 170Marion Clawson, e.g., divides the OR—experience into "five more or less clearly separate phases: anticipa- tion, travel to, on site, travel back, and recollection" (Land and Water for Recreation [Chicago: Rand McNally, 1963], pp. 40ff.; cf. also ORRRC Report No. 24, op. cit., pp. 75-76; cf. Canadian Fisheries Reports, op. cit., pp. l3-lS). 171 Some goods, especially "public goods" (hospitals, parks, etc.) need not really be "actually" consumed by everybody and still yield an anticipatory return in the form of an "option value," i.e., "the option to consume in the future." This stand-by value or value of availability (for times of need)--a kind of insurance--can be viewed as an "external economy," as has been shown by Burton Weisbrod in "Collective-Consumption Services of Individual—Consumption Goods," Quarterly Journal of Economics, August, 1964, pp. 471-477. 169 excessive material object consumption, usually only derives very short—lived, quick, almost instantaneous satisfactions and therefore must unceasingly try to amass and attain new ones. He thereby does not only lose the capacity to enjoy the goods,172 for as we saw, separation- scarcity is a necessary condition for true enjoyment and value, but he may never come to realize and therefore change this neurotic process of good-accumulation. We can in this context and place only hint at the effect which the inclusion of this distribution factor, i.e., the time spacing of commodities, in general, will have on utility and welfare theory, which still Operate on 172Manfred Frings in his discussion of Max Scheler's Theory of Social Economy (p. 140) notes: "The amount of the production of agreeable things, Scheler says, is in proportion of the lack of human capacity to enjoy them. The ancient moral maxim, according to which one may obtain fullest enjoyment with the least means of agreeable and useful things, has been reversed. Hence, Scheler attributes to modern society the 'ideal' of the minimum of enjoyment with the maximum of agreeable and useful things.'" If Scheler's therapy of “affluent societies" is correct, this may lead to a complete reversal of welfare- utility theory. Manfred Frings, "Max Scheler's Theory of Social Economy with Special Attention to its Ethical Implications," Review of Soc1al Economy (September, 1965), pp. 127-143. The contemporary demand, especially among the young generation for material relatively "simple": non-shaved, un-washed, un-cleaned, etc., "hippy—beatnik" styles of existence, the strong demand for OR in the "wilderness" and in "primitive" areas (cf. ORRRC Report No. 3), the "back to nature" call of a post-Rousseauean, mass-touristic age ("to get away from it all"), can be looked upon as a way of creating and demanding "dietances" or scarcities, in order to be able to enjoy again that from which one has paid to become distant for a while, or to be able to enjoy a more permanent distance as such. y. 2‘ ‘-m I‘.‘ h w- 170 the assumption that utility is an increasing monotonic function Of increasing rates (amounts per period) of consumption of commodities. Utility is, however, as we have demonstrated above, also affected by the time- distance-distribution of a certain number Of commodities per period, a distribution, which can differ, depending upon whether the consumption of the particular quantity of goods per period occurs simultaneously (at once), or in even or uneven (unequal) spaced intervals. Henceforth, the traditional indifference surface can continue to be drawn therefore only under the explicit assumption Of instantaneous/simultaneous (zero time spaced) consumption. For if we let the TD's between the chosen equilibrium number Of homogeneous commodities vary, we will have to draw different indifference curves representing equal levels of satisfaction (U), but different time-distance- distributions (TDD's). In Figure 17, e.g., all three indifference curves represent equal levels of satisfaction, but varying TDD's. In equation form, this amounts to saying, that the correct specification of the utility function should read: 173Cf. A. Mahr, Op. cit., p. 453. , It would be absurd to resort to the possible way out of the dilemma, by treating homogeneous goods with different TDD's as different goods. Whether the TDD of a good per period could simply be called and handled as another "characteristic," is doubtful, but should be further explored. Cf. K. Lancaster, "A New Approach to Consumer Theory," Op. cit. 171 /\ I2 I I“ D wa-a n17< ’3 o '11 ‘8 "11h ’38 O tifij _§ \ I. (T22311 )Twifi) J I (T‘Dbxq, TDsz) QTY, OF 6003 x1 PER PERIOD Figure l7.--Indifference curves with varying time distance distributions. TDD , TDD ,...TDD ll X21---Xn; X ), where U=f(X X X l 2 n X1...Xn are individual commodities and where TDDX is the l time—distance-distribution Of good Xl per period, for example. TDDXl is defined through: a. the time distance (measured in time units) between individual acts of consumption Of a certain quantity Of X per period, and l b. the sequential ordering of these individual acts of consumption. It would be beyond the scope of this analysis to show how the TDD is measured. Suffice it here to indicate 172 that different TDD's can affect (U) positively, negatively, or not at all.174 Unless commodities are consumed to an increasing extent simultaneously or instantaneously (to which, as we saw, there is a natural human capacity limit) per period, an increasing (decreasing) number of goods per period must necessarily shorten (lengthen) the TD between at least some of the goods. But relatively shorter (longer) TD's tend to decrease (increase) relative commodity 174An example may illustrate what we mean by dif- ferent TDD's. Let X1 represent the rate of consumption of six apples per day (24 hours). These six apples can be consumed at a finite number of equal or unequal TD's. For instance, all six apples may be consumed at once, i.e., TD's = 0. The utility (U) of the six apples consumed all at once, may, however, be different, depending upon their sequence of consumption, i.e., when during the 24 hours the act of consumption takes place. It may be U1 when I consume them at 8 a.m. and U2 when I consume them at 4 p.m. (where U1 # U2), etc. Various possibilities of equal TD's exist. When I consume one apple every four hours, all TD's = four hours and utility - U3. Consumption of two apples every eight hours gives a TD Of eight hours and U4. Consumption of three apples every 12 hours, gives a TD of 12 hours and U5. Furthermore, egual TD's (TD = six hours) are possible when I consume one apple at 12 p.m., two apples at 6 a.m. and three apples at 12 a.m., yielding U6. The same TD's may, however, also result, if I consume the same amounts in different sequences, i.e., three apples at 12 p.m., two apples at 6 a.m., and one apple at 12 a.m., yielding U7. If we include, in addition, the unequal TD's, we see that there exists an astronomical number of TD— and sequence possibilities. We can imagine that the individual is able to rank all these TDD possibilities in an ordinal scale of preference, i.e., he can say, e.g., whether U4 is greater, equal to, or smaller than U6, a.s.O. .772?""e.4..-------Il""' I_-._ 173 values, cet. par., as we saw. Our TD argument, thus supports and reinforces the Law of Diminishing Marginal Utility, in fact, provides it with a novel rationale.175 Furthermore, we see that the number of goods per period and the TD separating their consumption, under the above con— ditions, are not independent variables. Our TD approach may even assist in the correct definition Of "periodically recurring," "constant," "regular" and "non-recurring" (unique) wants, according to which economic consumption (planning) periods are to be distinguished.l76 17580 far, it has not been sufficiently UHderStOOdr that the Law Of Diminishing Marginal Utility corresponds to the Second Law of Thermodynamics in physics and can be explained in terms of the increased entropy. The Weber- Fechner Law of psycho—physics may represent a bridge in this direction (cf. footnote 168; cf. C. G. Jung, Op. cit., pp. 25-27). If we picture the expected future act Of consumption Of a good A to stand as much in a relationship Of polarity with the present act Of consumption of the same good A, as does the past act of consumption Of A, and if we picture a tension Ofppsychic energy to exist between these poles unified in the present, we may find again a psycho-physical explanation and counterpart to our theory: "the opposites equalize one another, and gradually a new attitude develops, the final stability Of which is the greater in proportion to the magnitude Of the initial differences. The greater the tension between the pairs Of Opposites, the greater will be the energy that comes from them; and the greater the energy, the stronger will be its constellating, attracting power" (C. G. Jung, op. cit., p. 26, also pp. 25ff.). 176Cf. Rosenstein-Rcdan, Op. cit., p. 80; cf. A. Mahr, Op. cit. 174 Let us return, after this more general clarification Of the TD theory, to the main purpose Of our analysis, i.e., the estimation of the relative values (above PW) Of OTI's per period. In formal terms our conclusion can thus be summarized in the following equation: m (4) = z P- ..;TD.. . TD. . . UOI‘IE]. f (10"11'5113 m-mm, ln—u-m' in which UOTIp is the utility of the j-th OTI of size (i) 13 per period (p), when there exist j=1...m OTI's of size (i) (duration = hours) per period (p) and i = 12...568 hour sized OTI's per period (cf. column 1 and 4 in Table 2). m Within the brackets, Z OTI? stands for the frequency, or 1 total number of the i-sized OTI's per period; SIi' is the actual size (duration) of the j—th interval of size (i) and TDin—(j+l)]’ TDi[j-(j~l)] represent the sequential arrangement of the j-th, i-sized OTI, i.e., its time distance from the next, (jrl)th OTI of size (1) and from the last (past), (j-l)th OTI of size (i), when the TD is Observed by the individual at the end and at the beginning Of the j-th interval under consideration, respectively. Thus, Ip will be greater, the greater the TD's and i] m 9 SIij, and the smaller i OTIi, cet. par. UOT 175 Equation (4) therefore has the following partial derivatives: aUOTIP. 8UOTIP. aUOTIP. aZOTIP 351.. aTDi[j*(j+l)] l 1 13 8UOTIP. 1‘ l] > 0 ts ilj-(j-lH " BTD Going a simplifying step further, we postulate that: K (S) UOTIP. = f (Ki*)’ where 1] - SIij x Tfiij (6) Kij = m ‘ , and z OTI? l 1 TD. . . + TD. . . 177 (7) §5_. _ 1[3-(3+l)] 113-(3-1)] . ij 2 8UOTIP. where ——§E—il-> 0' ij ——2 177——— m TDij and Z OTIS may not be independent vari- 1 ables, as an increase in the number of OTI's of size (i) per period (P) must naturally decrease the TD between some Of the (m) OTI's, but may not necessarily decrease just the TD of the j-th OTI Of size (i), in whose value we happen to be interested. Both variables must therefore be included in equation (6). 176 Fxpressed in words, we can summarize by saying, that the value Of the j-th interval of size (i) per period (p), is (ordinally) positively correlated with K.178 If K > K > K2, i.e., if the absolute value Of K 1 exceeds the absolute value K1 and K1 exceeds the absolute value K2 (transitivity requiring that K also exceed K2), Of an OTI, then the ordinal value of this interval will be greater than K than under Kl, greater under Kl than under __ 178As will be explained subsequently, the inclusion Of TDi- in equation (6) will be only justified and realistic, if within the TD's there occur no OTI's which are bigger (of longer duration) than the j-th OTI under consideration. Our TD theory is, as we already indicated pre- viously, reminiscent Of the famous Weber-Fechner Law of psychOphysics, i.e., S = k log R, where S = sensation, k = a constant and R = stimulus intensity. In words, the size of the sensation can grow arithmetically only, if the stimulus intensity increases geometrically (the difference between S and R, i.e., the “loss" in sensation may be due to the increase in entrOpy (cf. footnote 175). If we substitute in the equation TD or K for R and U for S, we have arrived at a specific form of equation (5), with its "ordinal" restriction. Furthermore, we cannot here enter into a discussion of a possible "isomorphism" existing between the time- distance-distribution of goods and the sensation therefrom: a longer TD producing increased sensation of lack (scarcity) in the brain. (Cf. Wolfgang KOhler: "It is a frequent experience that one event lies temporally between two others. But experienced time must have a functional counter- part in brain events just as experienced space has. Our principle (of psychophysical isomorphism) says that the temporal 'between' in experience goes with a functional 'between' in the sequence of underlying physiological events . . ._pxperienced order in time is always structurally identical with a functiopgl order in the sequence of correlated brain processes" (Gestalt Psychology, [New York: A Mentor Book, 1961, 1947], p. 39; cf. also pp. 89, 117, footnote 7) (bracket added). 177 K2 and greater under K than under K2. ”Ordinal" means, that we do not presume to know by how much greater the interval values are, i.e., means, that we do not make the "cardinal" assumption of utility measurement. Making use of several distinct interval sizes of Table 2, we may illustrate equations (5) and (6) in Table 3. The results for K in column (6) Of this table, in general, are in accordance with what we would expect, i.e., the OT, or parts thereof, that separates one 8-hour work day from another (i.e., the 16 hour OTI), is valued relatively less than the CT, or parts thereof, Of the vacation interval, e.g., and part or whole Of the OT Of an extended week-end, is worth more relatively than part or whole Of the OT Of a normal (two day) week-end, etc. There is in fact only one difference in K—values in column (6) which may be subject to doubt: why should the value Of a 24-hour holiday (or time unit thereof) exceed the value Of a longer normal weekend179 (or time unit thereof)? Our result in column (6), i.e., K = 31008, probably is biased upwards, because, although the TD between the three 24-hour holidays may happen to be greater than the TD 1791f the comparison were between a 24-hour Sunday and a 24-hour holiday OTI, there would be no doubt about the relative higher value Of the latter OTI, because holidays are usually less frequent and are separated usually by greater TD's per year than Sundays (cf. A. Nikisch, Op. cit., p. 341; cf. A. Hueck and H. C. Nipperdey, Op. cit., pp. 272-273). 178 .omamn noon mmmleoe one we Ham: we no enhances on» was» on omHm .HHoEm 00» mo: oodohoumwo has Amwnowv m one. mo anecdote one: .Hsmmaflcmos nomflhmesoo N manna "menswam Ho eonsom .qomflnmesoo o=Hm> Hmcflono one oonouam o>mn mam oasoz pa mm .ondooooae XoHQSOo whoa was» Op phonon no: ode o3 .Indoc emlom one undo: @0100 on» mapmwmwuman on oasos pH nwsOAuH< mafia sacrum same» enamoop .m.Heo on» oxen op .hnmmmoowa mm: pH .ooosfiocw osam> m ages on .mmuHmIHao Hosea some mausoHOHHMSm ooHoMMflo noes: moNHmIHBO omen» hano Arv.Hoo GH "opoz o thongs v ate. Ntm NE .36 2956 «S «GMT: 06 b$mN N omue wow u, . e oos o o; 96-0mm: ushemowv N Meme ommm ohm mmwwww.¢ mm emezmexw J 0 Mom we we» 3N tot it ezmlzmmz \\ utZMoé outcoem m, omen mwaw 3.3 We . em x i) OTI's. In Table 3, we have indicated this procedure in terms of the holiday- row figures in brackets. Now, the K-value for week-ends exceeds the respective K-value for holidays, which sub- stantiates our previous expectation. The conslusion which we can derive from the fore— going excursion into TD—theory for our analysis Of OR benefits is, that: a. In comparison to the value of other, ppp— outdoor recreational OT, the value Of outdoor recreational 92: being usually spent during week-ends, holidays and vacation periods, probably exceeds the value Of the other OT, and that b. PW probably underestimates the money value per hour of the total time spent at OR-sites per period by 180 outdoor recreationists, relatively more in cases where certain OR—sites "consume," so to speak, relatively more vacation time than week-end time, and relatively more week-end time than holiday or evening time, etc., in comparison to other OR-sites. The above analysis may also confirm the finding Of l the Outdoor Recreation Resources Review Commission con- 2‘... -n.. .___.__ . “I tained in ORRRC Report NO. 5, p. 19, Table 11, i.e., that only a relatively low percentage (25.6%) Of the sample of outdoor recreationists interviewed at 24 US recreation areas in 1960/61, were on a "major annual vacation," while 53.6% were on "week-end trips," "overnight trips," or a "day outing." There may thus be a great number of people, who reserve their prime (most valuable) vacation time for trips abroad (which usually can only be made during the relatively "longer" vacation OTI's), and who therefore spent only the relatively less valuable week-end time or holiday time at home. This behavior may also reflect the certain relative unattractiveness, the relative inferior 180 quality (the immense distances, through very often 180This is not to deny that the relative "unattrac- tiveness" of domestic OR areas relative to foreign OR areas, at least for a certain species of individuals, may be a world-wide phenomenon: the grass is said to be greener on the other side of the fence. Also, living close to the most beautiful scenery, architecture, etc., in the long run becomes monotonous, as the Law of Diminish- ing Marginal Utility never stops Operating. Again, variety is the spiec of life. . There may thus also exist a spatial distance scarcity (value) creating effect, which is analogous to the 181 barren, desert-like, monotonous landscapes and through polluted residential areas whose "beautification" is still 'at most marginal, which the US Outdoor Recreationist has to traverse in order to get to one OR area, or from one area to another--besides the relatively high expenditures in time and money which these distances imply—-are also aspects of inferior quality) of present domestic US recreation areas-—especially for high income earners-~in comparison to comparable foreign OR areas (it is one of the comparative advantages Of European OR areas, for example, that they are located relatively closely together and that they are not separated, in general, by "waste- lands" of external diseconomies), a speculation, which is supported by the statistic that Of the 25.6% of outdoor recreationists who spent their "major annual vacation" at the OR areas in the USA, nearly 50% (49.1%) spent it in National Parks and that the predominant percentage Of 181 wilderness users were spending their vacation time time distance effect: the farther away the OR area, the scarcer it therefore is relative to human wants, the greater its attraction, cet. par. The expansion of tourism, in fact, confirms this tendency, Furthermore, the relative value of homogeneous goods at spatially distant points-- their transportation cost differential, etc.--i.e., the Economics of Transportation and Location, may thus be unified with value theory along the distance concept. 181 Cf. ORRRC Report NO. 3, p. 171, Appendix B. 182 both, kind Of OR areas, which are known to be areas Of exceptional and distinctive quality. In other words, if the contention that the most precious vacation time (at least for high income recipients) is to a large extent spent at OR areas Of superior quality,182 i.e., areas whose supply is rather limited (at home), is correct, there should be a tendency for substantial increases in foreign tourism, as incomes (PW's) and vacation time increase, and there should be a tendency for stays at domestic OR sites to be rather of short term nature. At the extreme, each country's OR areas mgy ultimately be visited mainly by visitors from abroad. Creating ppy OR areas close to residential—urban areas, should therefore be a priority goal for recreation planners also from this point Of view. It was one Of the "main thrusts" of the ORRRC Reports that OR should be "peOple oriented" and "closely allied to the urban areas "183 where peOple live. The land acquisition program of 182 ,. . . Not only money prices, but also time prices can therefore be indicators of the quality Of goods. This point will be the core of our section on quality (V, 4. A). (Cf. Andre Gabor and C. W. J. Granger, "Price as an Indicator of Quality;" "Report on an Enquiry," Economica, February, 1966, pp. 43-70; cf. also T. Scitovsky, Op. cit., pp. 403ff.). 183Edward C. Crafts (Director, Bureau of Outdoor Recreation), "The Dilemma Of America," Remarks before the Nevada Governor's Conference on Natural Beuaty and WWW-nut! 183 the Land and Water Conservation Fund, seems to follow the above priority, as is, e.g., evidenced by the fact that more than 95% of the recreation land area (158,800 acres) to be purchased by the Forest Service in 1965/1966, "was located within 125 miles or two and one-half hours' driving time Of urban areas."184 ! (6) The Direct Price Of Own Time 7 So far, we have demonstrated that the income- i Opportunity-cost money weight Of own time per hour (PW) is i- an underestimate of the value of OT per hour in all but exceptional "undertime" case . TO this indirect (Opportunity cost) value P should, W however, be added a second component—-thus reinforcing the Outdoor Recreation, Las Vegas, Nevada, September 21, 1966; released by Bureau of Outdoor Recreation, U.S. Department of the Interior, September 21, 1966, p. 4 (mimeographed). See also: Federal Executive Branch Policy Governing the Selection, Establishment, and Administration pkaational Recreation Areap, Op. cit., pp. 4-5. W} . . National Recreation Areas should . . . be strategically located within easy driving distance, i.e., not more than 250 miles from urban population centers which are to be served." "Preference should be given to proposed National Recreation Areas that: a. Are within or closely proximate to those Official U.S. Census Divisions having the highest popula- tion densities;" .184" - - l ' Expanding America 5 Outdoor Recreation Estate-~The Land and Water Conservation Fund's First Year and a Half," U.S. Department Of the Interior, Bureau of Outdoor Recreation, cumulative to June 30, 1966, p. 3 (mimeographed); see chart: "Driving Time from Center of Nearest Urbanized Area." 184 conclusion that Pw is really an underestimate Of the money value Of own time per hour--which we call the direct price of own time and which amounts to a portion or to the whole of the price paid for time-saving devices/goods (skills), like cars, washing machines, sewing machines, sleeping cars, etc., and/or a portion of the wage paid for servants. This we can show in Figure 18 and its quadrant II, where OK2 is the non-leisure OT Of quadrant I, which remains after the "own leisure" part of own time (KKl) has been subtracted from the total own time (OK), and which (i.e., 0K2) could be converted into additional leisure through the help Of a servant or certain goods. Quadrant II Of Figure 18 contains a graphic representation Of the ordinal utility function185 8U > EU 6? 0' aALOT 0)' (8) U = U(Y,ALOT), ( where (ALOT) is additional (to KKl) leisure-own-time consciously bought through the help of and investment into time-saving servants and/or goods. Function (8) is subject to the time-budget constraint: (9) OK = NLOT + ALOT, (at equilibrium L in 2 Figure 18: NLOT = KZN and ALOT = NO), 185The indifference curves of quadrant II are those Of quadrant I only turned around by 180°. 4‘.- 3“ ..l 111 IIIIE . 111p a 2!:i . II. whomeh .oHSmHoa Hmcoflufitce mo mmmcouoe "Hope: wasp ozonmeflu paom one ma mz:.220 .N NICK dim» W V‘ r¥ O 2 k V x W 3% oH PH \ .3 AH 8 . 1 : ow . 2 4H mm E M w 3w m H a /\ AH 186 where OK2 = OKl = total non-leisure—own—time of quadrant I, NLOT = OK2 - ALOT = non-1eisure-own-time; and the money budget constraint: (10) Y = PwS x ALOT, (Y is now measured in the. downward direction, starting at point M), where (Pws) equals the money wage rate per hour of the servant(s) and/or some imputed price (consisting of both money and time costs) for time savings per hour derived from the price of time saving goods,186 when his/their productivity is equal to the productivity of the indi- vidual under consideration. The assumption of equal productivity has no other meaning as that, for simplifying reasons only, we presume one hour of his/their service to substitute for exactly one hour of the individual's own time which he would need tO perform the servant's/good's task himself, i.e., without the help Of "servants," 186While under a broad interpretation, nearly all goods could be said to possess time saving utilities (compared to the situation where they would have to be produced by the individual himself), the analysis is here restricted to only those goods, which are purchased directly intentionally (also) because of their time saving utilities, i.e., in the mind of the buyer the whole or at least part of the price paid for the "goods" is paid for their time saving utilities. The same good may thus have different time saving utilities for different consumers, depending also upon the frequency of use of the good. The consumer's awareness Of the time—saving utili- ties Of goods is Often a function of advertisements which stress the time-saving properties Of goods. mm?»- spin-mu. 15.; __ I 1 187 interpreted in the widest sense, to include also the own time-saving skills of the individual.187 For simplicity we assume furthermore, that pply time-saving utilities are involved in the purchase of additional leisure via time~saving servants/goods, although other utilities (e.g., effort-savings, convenience, ._'-.'n n"!- flexibility, etc.) may be involved. In case such other utilities are simultaneously bought, only a fraction of Pws will be the direct price of own time per hour. Wifiifmgf '. A... We thus consider the time-saving utilities to be an intrinsic characteristic shared by many goods and maintain--"that it is the properties or characteristics of the goods from which utility is derived" and not as the 187PWS could be modified to account for relatively higher and lower productivity of the servant/good, when compared with that of the individual. If the servant's productivity of performing the various tasks of the individual's household is, e.g., twice that of the indi- vidual (because Of specialization) per hour, the latter will actually pay only PWS 2 for each hour of substituted leisure, or expressed differently, to gain ppp hour of "extra" leisure, the individual needs to employ a human or non-human servant for only half an hour. Let (a) represent a relative productivity index, which equals one if the "servant's" and the individual's "own" productivity per hour coincide and which is greater (smaller) than one, if the servant is more (less productive. Then, Pws = Pwm/er where Pwm stands for the servant's money wage rate per hour unadjusted for comparable productivity. Assuming a downward sloping demand curve, the quantity of extra leisure (ALOT) demanded by the individual will therefore tend to increase (decrease), cet. par., if Pwm decreases (increases) and/or (a) increases (decreases). 188 traditional approach would have it--"that goods are the direct Objects of utility."188 Indifference curve ILIL indicates that the indi- vidual would be willing to substitute decreasing amounts of income (Y) for increasing equal units of additional leisure-own time (ALOT) and remain equally well off. At equilibrium L the worker actually exchanges (MH) dollars of wage income for (NO) hours of extra leisure (= ALOT).189 Expressed differently, (NO) hours of previous non-leisure- own time are transformed through the help Of a "servant" into (NO) hours of preferred (ALOT) at an hourly wage rate of P . The individual's level Of satisfaction has ws thereby increased from indifference curve IBIB to indif- ference curve ILIL. With income (OM) which our individual has earned in the first round,190 so to speak, he does "buy back" at 188 ‘ II N KelVin J. LancaSter, A New Approach . . . , Op. cit., p. 163. 189 Obviously, leisure is only one of a multitude of possible uses of the."bought" own time (NO) and in practice it may be difficult to disentangle for which substituting uses the time was actually bought. This dif- ficulty, however, does not change the substance of the argument. 190While the employment of a time-saving servant/ good probably affects the individual‘s sold time/own time decision in quadrant I--the decision of a mother to enter the labor force (i.e., to supply certain quantities of ST) may depend upon the price and availability of time-saving baby-sitters, "instant" foods, etc., which may serve as substitutes for her household activities--our static 189 equilibrium (L), (NO) or (LH) hours Of leisure (or other own-time). The total amount Of leisure, therefore will now amount to (KKl) + (NO) hours, Of which (KKl) is "own leisure" (i.e., leisure not directly bought) and (NO) is directly "bopght leisure." The total price (cost) of (KKl) + (NO) hours is then at least: (11) (KKl) X PW + (NO) X PW + (NO) X Pws = PW [(KKl) + (NO)] + (NO) X Pws From which follows that the price per hour of leisure (PL) is: NO In the special case when (KKl) is zero and (NO) positive, (13) .PL = Pw + Pws' and when (N0) = 0, while (KKl) is positive, analysis, for simplicity, separates the, in practice, Often simultaneous decisions of quadrant I and II in such a way, that the decision in quadrant II is treated after the decision in quadrant I has occurred. For example, the decision in quadrant I may be based not only upon the wage rate PW, but also upon Pwsv i.e., one is inclined to work relatively more or less hours, the greater the differential between PW and Pw and between (a) and (d1), cet. par., where (d) and (d1? measure the "own" and the servant's/ good's productivity (cf. Jacob Mincer, Op. cit., pp. 74—75), respectively. “aunt-impair)- jL - . . 190 (14) P = P Even if we can empirically only make a rough guess Of the direct price of own time (leisure),191 a price which is certainly not negligible in the face of the numerous goods bought totally or partially because of their time-saving utilities, the above analysis adds at least a second explanation to the earlier contention, that P is really an underestimate Of the money value of W own time per hour.192 While time is said to be money (cf. quadrant I), money can be said to be time (cf. quadrant II). 91Except when, e.g., additional leisure is bought exclusively through the help of a human servant, whose wage rate and productivity per hour are known to the individual. 192This second explanation is reinforced in those cases, where the consumption of leisure involves other direct expenditures, e.g., in the form of entrance fees to National Parks, golf club subscriptions, etc., expenditures, which would represent an additional possible third element in the total price of own time (leisure). CHAPTER V THE TOTAL PRIMARY OUTDOOR RECREATION BENEFIT (l) Admission Fees Up to this point, we have considered the time (length Of stay) actually, Physically Spent at OR-sites193 and its money value, to be the measure of primary OR- benefits. TO be added to the time price naturally are the nominal fees, money charges, collected at the entrance of OR areas per annum and one estimate Of the money portion of the total primary OR-benefit estimated indirectly (cf. Chapter II). 193This time will be a summation of visitor-hours distributed most often unevenly over the year, month, week, or day. TO avoid idle capacity Of the OR-area resulting from this uneven distribution, multiple uses of the area may be suggested (cf. Multiple Use Of Land and Water Areas, ORRRC Study Report 17 [Washington: U.S. Government Printing Office, 1962]); cf. Clawson and Knetsch, Op. cit., pp. 160 ff., pp. 177-188. Assume that there are two OR-areas with the same total annual OR benefit, but with different (seasonal) distributions of these benefits throughout the year. The park which Offers the possibility for other, non-recreational uses (e.g., because its visitor-hours are highly concen- trated over a few months, while the other park shows a more even distribution of visitor-hours), would therefore have a higher social value. 191 192 Admission fees represent a clearly identifiable, measurable element of the total price directly paid for .OR.194 These fees must be distinguished from fees paid within the OR area for facilities, services (boating fees, swimming, camping fees, hunting fees, etc.) rendered. The latter fees serve as an allocator of resources within the OR area and not for the area itself. Both portions of the total primary OR-benefit measure, i.e., time and money prices, are clearly related, as the amount Of time spent at OR areas will, cet. par., decline (increase) if the money price increases (declines). (2) Travel Time The question arises, of whether besides the time price of the actual stay at or in the OR area, the time price and money expenditures incurred during the travel to and from the OR area should be part Of the total price paid for OR? The travel time tO and from the OR area would have to be included as part Of the total time price paid 3: and only if the length of stay at the OR area would have been 194For statistics on OR-fees see: . Hearings, on H.R. 13313 and related bills, Entrance, Admission, and User Fees at Corps of Engineers Projects, op. cit., pp. 95 ff. Hearings, on H.R. 3846, Land and Water Conservation Fund Op. cit. pp. 83ff. . ’ Briefing, on H.R. 5269, The Federal Water PrOJect Recreation Act, Op. cit., pp. l7ff. 193 extended by this travel time, had the travel been instantaneous (timeless). Expressed differently, the deciding criterion of whether the value of travel time should be added to the time price Of the actual stay, is the utility of travel itself. If the travel is enjoyable in itself (e.g., because Of roadside scenery), for the whole or parts of the distance travelled to and from the OR area, the parts or the whole of the travel time price should be allocated to the measure- 195 ment of highway benefits and ppp to the OR area itself. The same is true for direct money expenditures of travel for gasoline, tires, etc. The difficulty of disentangling the utility or disutility portions Of travel are even more increased when the outdoor recreationist is not on a single purpose trip (i.e., visits not only one OR area), but on a multiple purpose trip (visiting friends and relatives on the trip),196 for then one would have to decide of how much Of the total travel expenditures (in time and money prices) to allocate to the various OR areas visited (cf. Chapter II). As long as there is no clear-cut evidence with respect to the utility-disutility Of travel time among outdoor 195Cf. A National Program of Scenic Roads and Park- ways Recreation Advisory Council Circular NO. 4 . (Washington: U.S. Government Printing Office, April, 1964). 196ORRRC Study Report 20, Op. cit., p. 47 (Tables 46A, 47, 48), pp. 48, 55-57 (Table 56). 194 recreationists, there exists no justification for including this time in the total primary OR-benefit (price).197 (There seems to exist a certain optimal prOportion between the amount of travel time and the patron time spent at OR areas. The longer the travel time to the area, the longer will the patron time tend to be, cet. par.198 Few people will travel, e.g., five hours to stay only 10 minutes at the OR site. Travel time can be considered as a fixed investment in OR--if it does not yield utility in itself--whose rentability increases the longer the actual time spent in OR.) (3) External Economies Of Outdoor Recreation A possible fourth element of the total price (benefit) 0f OR are the EXternal Economies, i.e., benefits which are external to the time- and money-price system and are not accounted for in the time- and money- price system. These benefits can accrue: a. To the actually and physically participating recreationist and, 197The results of an empirical investigation as to whether travelling is a utility in itself, are included in: G. A. Norton, "Public Outdoor Recreation and Resource Allocation: A Welfare Approach," Land Economics, XLVI, No. 4 (November, 1970), 414-422, especially p. 421. 198 ORRRC Study Report 3, Op. cit., p. 139 (Table 60), p. 142 (Table 72). 195 b. to individuals not actually spending time pp an OR site, but to whom the OR site has value at a distance (in time and space). As to (a): External Economies and External Diseconomies can arise in OR as the result of consumer-consumer inter- dependencies in utility functions. This can mean that: (i) the utility which recreationist A derives from the "consumption" Of scenery X e.g., is also 1! a function of recreationists B, C, D, etc. consumption of scenery X and that ll (ii) the whole utility function of B, C, D,... etc. is a part of the utility function of A, meaning that A feels happier, the happier B, C, D,... etc. are. The question now arises, whether and in how far these benefits are already included in the time- and money- prices, i.e., whether they can be called External Economies in our time price system at all? Clearly, some of these interdependencies can be seen to influence the length of time which outdoor recreationists stay at a site: I may increase (reduce) the time spent at an OR site, the better (worse) the companionship I have found.199 In this case, 199When External Diseconomies exist, e.g., through crowding in a park, a time limit of stay may be set by the park administrator, in order to avoid the External Dis- economies--a form of time price administration. For an example of the External Diseconomies of OR, see "Ah, Wilderness--Severe Overcrowding Brings Ills of the City 196 the External Economies (External Diseconomies) are already internalized in the time price and no misallocation of resources results. In addition, however, there are External Economies which are ppp_already reflected in the amount of time spent, but which could be isolated in the form Of money which outdoor recreationists would be willing to_give up in order to be able to enjoy the External Economies, or would have to be paid when External Diseconomies are present,200 (to neutralize the External Diseconomies). In so far as the External Economies outweigh the External Diseconomies, the OR site is undervalued by the pp: amount of money people would be willing to give up to be able to consume the External Economies of OR. As to (b): An OR area may not only have value to those directly (physically) participating, but also to those who are at a distance, in time and space, from the area, whether they still can see the area or not. The To Scenic Yosemite (Park's Rangers Fight Crime, Traffic Jams, Smog; Bears Become Surly Gourmands)," Wall Street Journal, XLVI (June 24, 1966), 1. 200External Diseconomies are probably relatively small in comparison to the External Economies of OR: "For a minority of peOple the appeal of OR may lie in the possibility of getting away from people--to nature and solitude; but for the majority a major attraction of OR seems to be the Opportunity to be with peOple and share leisure activities with others" (ORRRC Study Report 20, Op. cit., p. 37; see also pp. 38, 57, 58). 197 External Economies of "current production" takes the form of a so-called pption value (to consumption in the future), or stand-by capacity of the OR area,201 i.e., the OR area acts like an insurance to non-users and we can imagine that they would be willing to pay a specific sum of money, be it only to know that the area still exists.202 may have a further value beyond that Of actual participation. At a distance, in time and space, the OR site ‘W 203 _ . . i As we already saw, the OR experience, beSides the i immediate enjoyment, begins with anticipation and ends with memory. The value Of the consumption time Of 2Ole. B. Weisbrod, Op. cit., 1964. 202This option value can be thought Of to be a positive function of the number Of OR areas existing, i.e., the fewer, scarcer the areas become, the greater will, cet par., be the value Of the remaining ones (cf. ORRRC Study Report 3, Op. cit., p. 214). In the case of wilderness areas, this form of External Economies to non-users may be especially high. Here, the External Economies probably account for a greater portion of the total benefit, as the actual intensity of use (time spent) is intentionally kept low to preserve the character of wilderness. Cf. ORRRC Study Report 3, p. 15, Op. cit.; cf. Clawson and Knetsch, pp. g££., pp. 168, 180, 181; and cf. Orris C. Herfindahl and Allen V. Kneese, Qualipy of the Environment--An Economic Approach to some Problems in Using Land, Water, and Air (Washington, D.C.: Resources for the Future, Inc., Distributed by The Johns Hopkins Press, Baltimore, 1965), pp. 76ff. There exists here an Obvious conflict between the aim Of maximizing the total benefit (time) of the OR area and preserving the character of wilderness. 203Cf, pp, 167-168. 198 anticipation (preparation) and memory should therefore be added as an additional element to the total time price. How to collect or measure these additional quantities indeed is a problem and cannot be solved here.204 The existence of these Externalities, however, supports the arguments of those, who maintain that OR should be and remain essentially a public good and should be subsidized. (4) Selected Problems A. Time Prices and Outdoor Recreation Quality The (subjective) quality of the OR experience and the (Objective) quality of the OR site, are clearly inter- dependent. It might be maintained that our time measure of primary OR benefits does nOt adequately reflect the quality differences Of OR areas, i.e., that the hour which recreationist A spends in OR area X (when area X is generally considered to be Of superior quality than another area Y) is not valued differently than the hour which A spends at area Y and that therefore a misallocation 205 of resources might result. Our time prices, however, 204It has been suggested that the "vicarious bene- fits question could be investigated by a public Opinion poll which asked such questions as 'How much in taxes would you be willing to pay for the preservation of wilder- ness areas?'" (ORRRC Study Report 3, op. cit., p. 225). 205Cf. "A Uniform Method for Measuring and Reporting Recreation Use on the Public Lands and Waters of the United States," op. cit., p. 18. 199 are not insensitive to quality differences, if we remember that it is the total amount Of time spent per person at an OR site, which is ultimately relevant for the benefit measurement. We maintain, that the greater the quality of an area, the longer will people tend to pppy at the area, EE§:_IZEE°I i.e., quality is reflected in the time price, or time price is an indicator Of quality. This becomes more Obvious when we Observe that quality of an OR area is made up Of elements like: number Of attractions (animals, fauna, mountains, lakes, waterfalls, swimming sites, facilities, etc.), the beauty of these attractions; weather, climate, size of area, etc. Empirical evidence supports our hypothesis: a. Man-days Of use per acre Of California wild and wilderness are clearly positively correlated with size Of area and number of lakes.206 b. "The data suggest that the intensity of recrea- tional use is governed to a large degree by the general character Of the region itself, relative to availability of recreational waters, . . ."207 206 . See ORRRC Study Report 3, op. Cit., p. 243, Table 147. 207 ORRRC Study Report 10, Op. cit., p. 42. 200 c. Assuming that the greater frequency Of participation in OR activities involves a greater expendi- ture of time, cet. par.: For hunting,swimming, and picknicking, there is a clearly evident relation between facility ratings (i.e., quality of facilities—~my insertion) and the proportion of residents in the area taking part in the activity.2 Statistical analysis reveals a very d. significant degree Of correlation between area On the average, visits and area facilities. 40 percent of the total variation in visits was accounted for by the facilities index. (The facilities index assigns numbers to various park facilities representing their relative power Of attraction.)209 As a possible indicator Of the OR area quality may serve the distance travelled to OR areas by outdoor recreationists, i.e., the area (park) with the greatest number Of recreationists having travelled the greater This distance (to the area) will rank higher in quality. "that the more distinc- Observation results from the fact tive an area is, the more willing people are to travel 210 long distances to utilize it." 208ORRRC Study Report 20, Op. cit., p. 8, also Table 8. 209 . . . The Future of Outdoor Recreation in Metropolitan Regions Of the United States, ORRRC Study Report 21, Vol. U.S. Government Printing Office, II (Washington, D.C.: 1962), pp. 34-35, Table E-l7. 210ORRRC Study Report 3, O . cit., p. 132. We abstract here from the difficulty when several OR areas are visited during the travel. Furthermore, the ‘5!“ 201 On first sight, this method of quality ranking may be taken as a separate index; it, however, reduces again to our time price method, when we once more consider that the distance travelled pp_and the length of stay 3p an OR area are positively correlated (cf. Chapter II): The longer the distance travelled to an OR area, the longer will, cet. par., be the time spent in the area (cf. p. 194). The empirical evidence clearly points in this direction: "The strongest single influence found on length of stay is distance Of the user's home from the wilderness area (table 60)."211 B. Activity-Variation Of Outdoor Recreation Benefits Not only does there exist a seasonal distribution of OR benefits, but benefits (time prices) are also dis- tributed over the various OR—activities performed during the visit of the OR area by the recreationist. Thus total OR-time spent at an area can be seen as being broken down into fishing—time, hunting-time, sightseeing-time, camping-time, etc. This breakdown will Obviously be of great use to those whose task it is to allocate, administer assumed direction of influence goes one way only: one travels great distances because of the high quality of the OR site, but the high quality does not depend upon the distance one travels. 211ORRRC Study Report 3. 92;—EEEJ' p' 139' see also Table 61. 202 and manage resources within the OR areas. A draft revision Of the Recreation Advisory Council Circular NO. 6 (Op. cit.) through the Standing Committee on Outdoor Recreation Of the Environmental Quality Council, notices the importance of this breakdown and recommends as an additional (to the Recreation Visitor-Hour) recreation use data-definition the Recreation Activity-Hour. It is defined as a "Recreation visitor-hour attributable to a Specific recreation activity "212 212Cf. ORRRC Study Report 24, Op. cit., pp- 12-13. Cf. Recreation Information Management (RIM) Hand- book (Forest Service Handbook), Amendment NO. 16, April 1970 (124.ll--2), Amendment NO. 22-*, October, 1970 (124.21) (Washington, D.C.: U.S. Department of Agriculture, Forest Service). ‘uulamnflrf*filllf -. 4" CHAPTER VI SUMMARY AND CONCLUSIONS The consumption Of goods/activities usually does not occur instantaneously. It takes time to consume goods in addition to money. AS time is, as we saw (cf. Chapter III, 1), a scarce good in itself and thus is economized-- it can be treated analogously to money proper (with due regard Of the exceptions), for: Time is Money (cf. Chapter III, 2), and the amount Of our "clock-time" (and its money value) which we allocate for the consumption of particular goods (PT), is part Of--besides the money price (PM) per unit Of the goods--the pppgp price (TP) per unit of goods, which we pay in order to be 3212 to consume them. We can write therefore the true price per unit of the jth good/activity as follows: TPJ = P3 + P3 M T' where there are j=1...m, goods. (P%) can be expressed not only in terms Of pure time units (hours, minutes, etc.), but also in terms of money units (S), for the wage rate is, as we showed diagrammatically, in most cases, a minimum Opportunity-cost money estimate per hour Of consumption time (OT). 203 204 The wage rate (PW) is a minimum monetary estimate or underestimate per hour Of own time (leisure), because ): there exist above (Pw a. an own time surplus, and b. a direct price Of own time. The core Of the dissertation consists in the con- tention that Pw is an underestimate of the value Of own time per hour. This is clearly in Opposition to the fre- quently heard claim that individuals really have no free choice between sold time and own time (standard work week). The latter claim, however, must imply one of the following, i.e., either that: a. Actual sold time - Desired sold time, or b. Actual sold time > Desired sold time (overtime), or c. Actual sold time < Desired sold time (undertime). As we have shown diagrammatically, only in the third case (c) of undertime does there exist a weak possibility that the wage rate may overvalue the Opportunity-cost Of OT per hour; in both Of the other cases, the wage rate was shown to be an underestimate of the value of OT per hour. The claim of the critics should therefore be rephrased and made more Specific by saying: that indi- viduals would like to work more than they are actually doing per period (undertime, or enforced OT), but are 205 unable to do so for reasons beyond their control.213 Considering the value Of the specific time spent in OR, we must furthermore refine the analysis, for even in cases Of undertime,the OR-own time may be not part Of the enforced own time, but be part Of that portion of OT that is desired for its own end. If the latter is true, then P is truly W no overestimate of the money value of this OR-own time, but an underestimate as in the usual case. The undertime- overestimate possibility is moreover excluded in those cases where sufficient undertime-compensations exist. Applied to the field Of public OR-benefit measure- ment,a direct money price, P&, is absent here other than in nominal entrance fees, and the price (primary OR- benefit) Of OR therefore reduces to P%. In order to compute a measure of total primary OR-benefits, to PJ i.e., the monetary value of visitor- TI hours per OR area and year, must be added: a. a proxy for Pi (a review Of possible methods Of measurement is presented in Chapter II), b. the value Of external economies of OR, 213For demOSCOpic evidence about the preferences Of individuals (in four European countries and the U.S.A.) concerning their desires for more or less work, see . George Katona, Burkhard Strfimpel and Ernest Zahn, Zwei Wege zur Prosperitat (Dusseldorf, Wien: Econ Verlag, 1971), pp. 159ff., especially Table 9-5 and Appendix C, pp. 281ff. 206 c. entrance fees, and d. an appropriate value Of the travel time. Thus our OR-benefit measure is clearly use-oriented and use-intensive, accounts for "intangibles," and "adequately calibrates" a substantial portion of these benefits, although the monetary values must needs be minimum values, because Pw was shown to be a minimum weight of the value of own time. The empirical measurement Of P%--since the publica- tion of visitor-day statistics (cf. Appendix C) for U.S. recreation areas by the U.S. Government--should present no great difficulties anymore, and if an appropriate average wage figure for a particular OR area is unavailable, one can always resort to a minimum wage. We showed, that the system Of time prices could serve as a highly equitable (supplementary) public goods (accounting) price system and thus could help to solve the basic economic problems with which any society is confronted. BIBLIOGRAPHY 207 BI BLIOGRAPHY Books Bobrowski, Paul u. Gaul, Dieter. Das Arbeitsrecht im Betrieb, 5. Aufl. Heidelberg: Verlagsgesellschaft Recht u. Wirtschaft, 1965. , BOhm-Bawerk, E.v. Positive Theorie des Kapitals--Excurse- 4. Aufl., Vol. II. Jena: Gustav FiScher, 1921. Bfichmann, Georg. Geflfigelte Worte, Zitatenschatz. Berlin, Darmstadt: Deutsche Buch-Gemeinschaft, 1953. Camus, Albert. The Myth of Sisyphus and other Essays. New York: Vintage Books, 1955. Clawson, Marion and Knetsch, Jack L. Economics Of Outdoor Recreation. Baltimore: Johns Hopkins Press, 1966. Marion. Land And Water For Recreation. Chicago: Clawson, Rand Mc Nally, 1963. Dewey, John. "Time and Individuality." Time and its Mysteries. New York: Collier Books, 1962, Chapter 7. Eliot, T. S. The Complete Poems and Plays, 1909-1950. New York: Harcourt, Brace and World, 1962. Enpyclopedia Britannica. "Hours Of Labor." Vol. II, 1959, pp. 802-807. Encyclopedia Of the Social Sciences. "Hours of Labor." Mac Millan Co., 1950, Vol. 7, pp. 478-493. Feifel, Herman. "Death--Relevant variable in Psychology." Existential Psychology. Edited by Rollo May. New York: Random House, 1961, Chapter 3. Friedmann, Hermann. Wissenschaft und Symbol--Aufri8 einer symbolnahen Wissenschaft. Mfinchen: C. H. Beck, 1948. Friedman, Milton. Price Theory--A Provisional Text. Chicago: Aldine Publishing Co., 1962. 208 209 Herfindahl, Orris C. and Kneese, Allen V. Qualitypof the Environment. Baltimore: Johns Hopkins Press, 1%5. Hering, D. W. "The Time Concept and Time Sense Among Cultured and Uncultured Peoples." Time and its Mysteries. New York: Collier Books, 1962, Chapter 5. Hilgard, Ernest R. Introduction to Psychology. New York: Harcourt, Brace and Co., 1957. Hueck, Alfred u. Nipperdey, Hans Carl. Lehrbuch des Arbeits- rechts, 1. Bd. Berlin, Frankfurt a.M.: Franz Vahlen, 1963. C. G. The Structure and_pynamics of the Psyche, Vol. 8 Of the Collected Works, Bollingen Series XX. New York: Pantheon Books, 1960. Jung, Katona, George; Strfimpel, Burkhard; and Zahn, Ernest. Zwei Wege zur Proeperitat. Ddsseldorf, Wien: Econ Verlag, 19711 Knight, Frank H. The Economic Organization. New York: Harper TorcHBOOks, The Academy LIbrary, 1965. Knight, Frank H. Risk, Uncertainty and Profit. New York: Harper Torchbooks, The Academy LibEary, 1965. KOhler, Wolfgang. Gestalt Psychology. New York: Mentor Book, 1961. Linder, Staffan B. Das Linder Axiom Oder Warum wir Keine Zeit mehr haben. Gfitersloh-Wien: Bertelsmann Sachbuchver1., 1971. Lipmann, Otto. Qgs Arbeitszeitproblem. Berlin: Institut fur angewandte Psychologie, 1924. Mack, Ruth P. and Myers, Sumner. "Outdoor Recreation." Measuring Benefits of Government Investments. Edited by Robert DOrfman. Washington D.C.: The Bookings Institution, 1965. Maslow, Abraham H. Toward a Psychology Of Being. Princeton: D. Van Nostrand Co., 1962. May, Rollo. "Contributions of Existential Psychotherapy." Existence--A New Dimension in Psychology and Psychiatry. Edited by Rollo May, et al. New York: Basic Books, 1958, Chapter II. 210 Memoirs of the Life and Writings Of Benjamin Franklin. 3rd ed., Vol. V. London: Printed for Henry Colburn, 1819. Mincer, Jacob. "Market Prices, Opportunity Costs, and Income Effects." Measurement in Economics, Studies in Mathematical Economics and Econometrics—in Memory of’Yehuda Grunfeld} Edited by CarIIF. Chfist and others. Stanford University Press, 1963. Nikisch, Arthur. Agbeitsrecht, I.Bd., 3. Aufl. Tubingen: J. C. B. Mohr, 1961. Ott, Alfred E. "Der Zeitbegriff in der Wirtschaftstheorie." Wirtschaftskreislauf und Wirtschaftswachstum. Edited by Erich Schnéidér. Tfibingen: J. C. B. Mohr, 1966. Owen, John D. The Price Of Leisure. Rotterdam: Rotterdam University Press, 1969. Pechan, Hermann. "Arbeitszeit." HanwOrterbuch der Sozial- wissenschaften. Vol. 1. Stuttgart: Gustav Fischer; Tfibingen: J. C. B. Mohr, 1956, pp. 408-411. Sartre, Jean-Paul. Being and Nothingness. New York: Citadell Press, 1964. Schmidtchen, Gerhard. Die befragte Nation--Uber den EinfluB der Meinungsforschung auf die Politik. Freiburg: Verlag Rombach, 1959. Schneider, Erich. Einffihrung in die Wirtschaftstheorie, IV. Teil: Ausgewahlte Kapitel der Geschichte der Wirtschaftstheorie, 1. Bd. Tubingen: J. C. B. Mohr, 1962. Schopenhauer, Arthur. Aphorismen zur Lebensweisheit. Mfinchen: Goldmanns Gelbe Taschenbficher, 1960. Scitovsky, Tibor. Welfare and Competition. London: Unwin University Books, 1952. Sorokin, Pitrim A. and Berger, Clarence Q. Time Budgets of Human Behavior. Cambridge: Harvard University Press, 1939. Sulzer, Georg. Die wirtschaftlichen Grundgesetze. Zurich: Albert Mfillers Verlag, 1895. Tpe Rationalists--Descartes, Spinoza, Leibniz. Garden City, New York: Doubleday & Co., no date. 211 Weisbrod, Burton A. Economics of Public Health. Philadelphia: University Of Pennsylvania Press, 1961. Periodical Articles "Ah, Wilderness--Severe Overcrowding Brings Ills Of the City To Scenic Yosemite." Wall Street Journal, XLVI (June 24, 1966), l. "Arbeitszeiten der Erwerbstatigen." Bulletin des Press -und Informationsamtes der Bundesregierung, Bonn, Germany, Nrf44_(Mar6h 30, 1966). Becker, Gary S. "A Theory of the Allocation of Time." Economic Journal (September, 1965), 493-517. Brehm, C. T. and Saving, T. R. "The Demand For General Assistance Payments." American Economic Review, LIV, No. 6 (December, 1964), 1002-1018. Burton, T. L. and Fulcher, Margaret N. "Measurement Of Recreation Benefits--A Survey." Journal of Economic Studies, 3, NO. 2 (July, 1968), 35-48. Cesario, Frank J. and Knetsch, Jack L. "Time Bias in Recreation Benefit Estimates." Meter Resources Research, 6, NO. 3 (June, 1970), 700-704. David, Elizabeth L. "Lakeshore Property Values: A Guide to Public Investment in Recreation." Water Resources Research, 4, NO. 4 (August, 1968). "Eine Uberstunde." Die Zeit (Hamburg), January 18, 1966, 14. Foster, John H. "Measuring the Productivity Of Land Used for Outdoor Recreation." Land Economics, XL, NO. 2 (May, 1964), 224-227. Frings, Manfred. "Max Scheler's Theory of Social Economy with Special Attention to its ethical implications." Review of Social Economy (September, 1965), 127-143. Gabor, Andre and Granger, C. W. J. "Price as an Indicator Of Quality; Report on an Enquiry." Economica (February, 1966), 43-70. General Anzeiger (Bonn, Germany), February 18/19, 1967. WWI—{7' -.-, l .n ' _ _ n 212 Gumpert, Jobst. "Bezahlung von Mehrarbeit und Uberstunden." - Der Betriebsberater, Heft 12 (April 30, 1961), Hartsch, Erwin. ”Versuch zur Bestimmung des Okonomischen Wertes von Erholungsgebieten." Wissenschaftliche Zeitschrift der Technischen Universitdt Dresden, 19, Heft*2 (1970), pp. 49g:501. Hines, Lawrence G. "Measurement of Recreation Benefits: A Reply." Land Economics, Vol. 34 (November, 1958), 365-367. Hittmair, Anton. "Wissenschaft vom Urlaub." Muchener Medizinische Wochenschrift, lOl. Jg., Heft 31 (July 31, 1959): 1329—1333. Jacob, Hartmut. "Zur Okonomik der Erholungsfunktion des Waldes." Allgemeine Forst Zeitschrift (Muchen), 26. Jg., 17 (Aprl 24, 1971T, 348-351. Johnson, Bruce M. "Travel Time and the Price Of Leisure.” Mestern Economic Journal, 4, NO. 2 (Spring, 1966), 135-145. Klein, Frederick C. "Pay vs. Play-—Firms Offer Employes Double Wages If They Give Up Some Vacation." Wall Street Journal (May 24, 1966), l. Kleitman, Nathaniel. "Sleep." Scientific American (Nov., 1952), 6pp. "Krank." General Anzeiger (Bonn, Germany), May 8, 1967, p. 1. Lancaster, Kelvin J. "A New Approach to Consumer Theory." ~Journal Of Political Economy, LXXIV, NO. 2 (April, 1966), 132-157. "Long Hours and Premium Pay." Special Labor Force Report No. 57, from the Monthly Labor Review (September, 1965), 6pp., Tables. Mahr, Alexander. "Gegenwart und Zukunft in den wirtschaftlichen Dispositionen der Konsumenten." Zeitschrift fur NationalOkonomie, XXVI, Heft 4 (August, 1966), 435-4590 Mansfield, N. W. "The Estimation of Benefits from Recre- ational Sites and the Provision of a New Recreation Facility." Regional Studies, 5, NO. 2 (July, 1971), 55-690 213 Meissinger, H. lPauschalvergutungen im Arbeitsrecht." Der Betrieb, Nr. 19 (May 9, 1956), 448-450. Merewitz, Leonard. "Recreational Benefits of Water Resource Development." Water Resources Research, 2, No. 4 (Fourth Quarter, 1966), 625-640. "More Workers Gather Nerve to Switch Jobs as Labor Gets Scarcer." Wall Street Journal ( , 1966), l. Moses, Leon N. and Williamson, Harold F., Jr. "Value of Time, Choice of Mode, and the Subsidy Issue in Urban Transportation." Journal of Political Economy, LXXI, No. 3 (June, 1963), 247-264. Moses, Leon N. "Income, Leisure, and Wage Pressure." Economic Journal (June, 1962), 320-334. "Multiple Jobholders in May 1964." Monthly Labor Review (March, 1965). Norton, G. A. "Public Outdoor Recreation and Resource Allocation: A Welfare Approach." Land Economics, XLVI, No. 4 (November, 1970), 414-422. Oort, C. J. "The Evaluation of Travelling Time." Journal of Transport Economics and Poligy, III, No. 3 (September, 1969), 279-286. Owen, John D. "The Demand for Leisure." Journal of Political Economy, 79, NO. 1 (January/February, 1971), 56-76 0 Papst, H. "Zur Bewertung der Sozialfunktion des Waldes in Stadtnahe." Allgemeine Forst -und Jagdzeituog, 140. Jg., Heft 7 (July, 1969), 158-163. Pearse, Peter H. "A New Approach to the Evaluation of Non- Priced Recreational Resources." Land Economics, XLIV, NO. 1 (February, 1968), 87-99. Prodan, M. "Zur Bewertung der Sozialfunktion des Waldes in Stadtnahe." Allgemeine Forst -und Jagdzeitung, 6 (1968), 131-138. Rewolle, H. D. "Die Uberstundenpauschale." Der Betrieb, Nr. 51 (December 19, 1956), 1209-1210. Robbins, Lionel. "On the Elasticity of Demand for Income in Terms of Effort." Economica, VOl. 10 (June, 1930), 123-129. 214 Robinson, Warren C. "The Simple Economics of Public Outdoor Recreation." pend Economics, XLIII, NO. 1 (February, 1967), 71-83. Rosenstein-Rodan, P. N. "The ROle of Time in Economic Theory." Economica (February, 1934), 77-97. "Salesmen Reported in Love with Work--not (ugh) Money." New York Times (February 28, 1966), 29. Seckler, David W. "On the Uses and Abuses of Economic Science in Evaluating Public Outdoor Recreation." Land Economics, XLII, NO. 4 (November, 1966), 425—494. "Selbstandige arbeiten langer." Die Zeit (May 24, 1966), 13. Shoup, Carl S. "Production from Consumption." Public Finance, XX, No. 1-2 (1965), 173-202. Slocum, Kenneth G. "I'll Be Out Today--Rise in Absenteeism Plagues Firms Already Hurt by Labor Pinch." Wall Street Journal (June 6, 1966), l. Stigler, G. J. "The Cost of Subsistence." Journal Of Farm Economics, XXVII (1945). Time Magazine (January 6, 1967), p. 16. Trice, Andrew H. and Wood, Samuel E. "Measurement of Recreation Benefits." Land Economics, 34 (August, 1958), 195-207. "Traum vom eigenen Geschaft--Der Selbstandige kennt keinen Sieben--Oder Achtstundentag." General Anzeiger, Bonn, Germany (August 20/21, 1966). Ullman, Edward L. and Volk, Donald J. "An Operational Model for Predicting Reservoir Attendance and Benefits: Implications Of a Location Approach to Water Recre- ation." Papers: Michigan Academy Of Science, Arts and Letters, Vol. 47 (1961), Ann Arbor, 1962. Weisbrod, Burton. "Collective-—consumption Services of Individual-consumption Goods." Quarterly Journal of Economics (August, 1964), 471-477. Wennergren, Boyd E. "Valuing Non-Market Priced Recreational Resources." Land Economics, XL, No. 3 (August, 1964), 303—311. ___‘_- "u-mwwmmwmfiflli . O 215 Wennergren, Boyd E. "Surrogate Pricing of Outdoor Recreation." Land Economics, XLIII, NO. 1 (February, 1967). White, William M. "Evaluation of Recreation in Water Developments." Journal Of the Power Division, Proceedings of the American Society of CiVIl Engineers (May, 1965), 9pp. Winston, Gordon C. "An International Comparison of Income and Hours of Work." Review Of Economics and Statistics, XLIII, NO. 1 (February, 1966), 28-39. Wittenburg, Bernhard Paul. "Wirtschaft und Zeit." Heidelberger Studien, Vol. II, Heft 6 (1932), Heidelberg: VerIag der Weiss'schen Universitatsbuchhandlung. wJflWugd-b' _.1 - - : Q‘ l - - - M "I Government Documents A National Program of Scenic Roads and Parkweys, Recreation Advisory Council Circular NO. 4. Washington, D.C.: U.S. Government Printing Office, April, 1964. AyUniform Method For Measuring And Reporting Recreation Use On The Public Lands And Waters Of The United States, prepared by: Recreation Advisory Council Study Committee Number Two. Washington, D.C.: April, 1965, 56pp. (Mimeographed.) Cordell, Harold K.; James, George A.; and Griffith, Russel F. Estimating Recreation Use at Visitor Information Centers, USDA Forest Service ResearEh Paper SE-69, November, 1970, Southeastern Forest Experiment Station—Asheville-North Carolina, U.S. Department of Agriculture, Forest Service, 8pp. Crafts, Edward C. "The Dilemma of America." Remarks before the Nevada Governor's Conference on Natural Beauty and Outdoor Recreation, Las Vegas, Nevada, Sept. 21, 1966; released by Bureau of Outdoor Recreation, U.S. Department of the Interior, Sept. 21, 1966, llpp. (Mimeographed.) "Current Research on Sleep and Dreams." U.S. Department of Health, Education, and Welfare, Public Health Service. Washington, D.C.: U.S. Government Printing Office, 1965. 216 Dill, William A. A Partial Bibliography on the Economic Evaluation of Sport Fishing and FiSheries Resources. FAQ FISHEries Circular NO. 8 (Revision 1), prepared for the European Inland Fisheries Advisory Commission (EIFAC), Rome, March, 1964, 18pp. Economic Studies of Outdoor Recreation. ORRRC (Outdoor Recreation Resources Review Commission) Study Report 24. Washington, D.C.: U.S. Government Printing Office, 1962. Evaluation Standards For Primary_Outdoor Recreation Benefits. Suplement NO. l. WashIngton, D.C.: Ad Hoc Water w, Resources Council, June 4, 1964, 9pp. i "Expanding America's Outdoor Recreation Estate--The Land and Water Conservation Fund's First Year and a Half. U.S. Department of the Interior, Bureau of Outdoor Recreation, cumulative to June 30, 1966. (Mimeographed.) Federal Executive Branch Policy Governing the Selection, Establishment, and Administration of National Recreatibn Areas. Recreation Advisory Council CircuIar No. 1. Washington, D.C.: U.S. Government Printing Office, 1963. Federal Executive Policy Governing the Reporting of Recreation Use of FederaI Recreation Areas. Recreation Advisory Council Circular No. 6. Washington, D.C.: U.S. Government Printing Office, 1965. James, George A. Pilot Test of Sampling Procedures for Estimating Recreation Use on Winter-Sports Sites. USDA Forest Service Research Paper SE-42, September 1968, Forest Service, U.S. Department of Agriculture, Southeastern Forest Experiment Station, Asheville, North Carolina, 8pp. James, George A. and Tyre, Gary L. Use Of Water-Meter Records To Estimate Recreation Visits and Use On Developed Sites. U.S. Forest Service Research Note SE-73, April 1967, U.S. Department of Agriculture, Forest Service, Southeastern Forest Experiment Station, Asheville, North Carolina, 3pp. James, George A. Instructions For Using Traffic Counters To Estimate Recreation Visits And Use On Developed Sites. U.S. Department of Agriculture, Forest SerVice, April, 1966, Southeastern EXperiment Station, Asheville, North Carolina, 12pp. 217 James, George A. and Harper, Robert A. Recreation Use of the Ocala National Forest in Florida. U.S. Forest Service Research Paper SE-18, June 1965, 28pp. James, George A. and Ripley, Thomas H. Instructions for Using Traffic Counters to Estimate Recreation VisIts and Use. U.S. Forest SerVICe ResearEh Paper SE-3, March 1963, Forest Service, U.S. Depart- ment of Agriculture, Southeastern Forest Experiment Station, Asheville, North Carolina, 12pp. Kipp, Paul R. Apnotated Bibliogrpphy on the Economic Evaluation of Outdoor Recreation and—REIated Subjects,E1959_(available at the Central Library, Department of the Interior, Washington, D.C.), 29pp. (Mimeographed.) Marcus, Leslie F.; Gould, Ernest M., Jr.; and Bury, Richard L. Measuring the Recreation Use of National Forests. U.S. Forest ServICe, Pacific Southwest Forest & Range EXperiment Station, 1961, Tech. Paper 59, 26pp. Multiple Use Of Land And Water Areas. ORRRC Study Report 17. Washington, D.C.: U.S. Government Printing Office, 1962. National Recreation Survey. ORRRC Study Report 19. Washington, D.C.: U.S. Government Printing Office, 1962. Outdoor Recreation For America. A Report to the President and to the Congress by the ORRRC. Washington, D.C.: U.S. Government Printing Office, 1962. Participation in Outdoor Recreation: Factors Affecting Demand Among American Adults. ORRRC Study Report 20. Washington, D.C.: U.S. Government Printing Office, 1962. Pplicies, Standards, and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development Of Water and Related Land Resources. 87th Congress, 2nd Session, Senate Document 97. Washington, D.C.: U.S. Government Printing Office, 1962. Prewitt, Roy A. The Economics of Public Recreation--An Economic Study of the Monetary Evaluation of Recreation in the National Parks.r U.S. Department of the Interior, National Park Service, Washington, D.C., 1949. (Mimeographed.) 218 Projections to the Years 1976 and 2000: Economic Growth, Population, Labor Force and Leisure, and Transpor- tation. ORRRC Study Report 23. Washington, D.C.: U.S. Government Printing Office, 1962. Proposed Practices for Economic Analysis of River Basin Projects. Report to the Inter-Agency Committee on Water Resources ("Green Book"), prepared by the Subcommittee on Evaluation Standards. Washington, D.C.: U.S. Government Printing Office, May 1958, 56pp. Recreation Information Management (RIM) Handbook (Forest Service HandBOOk), Amendment NO. 167 April 1970, Amendment NO. 22-*, October 1970. Washington, D.C.: U.S. Department of Agriculture, Forest Service. Scott, Anthony. “The Valuation of Game Resources: Some Theoretical Aspects." Canadian Fisheries Reports, NO. 4 (Ottawa: Department Of Fisheries of Canada, May 1965): PP. 27—47. Spargo, R. A. "Methods and Techniques of Evaluation Of Sport Fishing." Canadian Fisheries Reperts, No. 4. Ottawa: Department of Fisheries of Canada, May 1965, pp. 53-69. Standards For Planning Water And Related Land Resources. Report to the Water Resources Council by the Special Task Force. Washington, D.C.: U.S. Water Resources Council, July 1970. The Future Of Outdoor Recreation In Metropolitan Regions Of The UnitedOStates. ORRRC Stfidy Report 21, Vol. II. Washington, D.C.: U.S. Government Printing Office, 1962. The Quality of Outdoor Recreation: AS Evidenced by User Satisfaction. ORRRC Stddy Report 5. WaShington, D.C.: U.S. Government Printing Office, 1962. U.S., Congress, Federal Water Project Recreation Act. Public Law 89—72, 89th Congress, S. 1229, July 9, 1965. U.S., Congress, House, Committee on Public Works, Briefing on H.R. 5269, The Federal Water Project Recreation Act. 89th Congress, lst SesSion, 1965. Washington, 575.: U.S. Government Printing Office. .3514”; “mm Val. " 9* 219 U.S., Congress, House, Subcommittee on Rivers and Harbors and the Subcommittee on Flood Control of the Committee on Public Works, Hearings, Entrance, Admission, and User Fees at Corps of Engineers Projects. 89th Congress, 2nd SesSion, 1966, H.R. 13313 and related bills. Washington, D.C.: U.S. Government Printing Office. U.S., Congress, Senate, Committee on Interior and Insular Affairs, Hearing, Land and Water Conservation Fund. 88th Congress, 2nd Session, 1964, H.R. 3846. Washington, D.C.: U.S. Government Printing Office. U.S., Congress, Senate, Report No. 1364, Calendar No. 1300. Land and Water Conservation Fund Act. 88th Congress, 2nd Session, 1964. Wagar, Alan J. Estimation of Visitor Use From Self- Registration At Developed Recreation Sites. USDA Forest Service Research Paper INT—70, 1969, Intermountain Forest and Range Experiment Station, Ogden, Utah, U.S. Department of Agriculture, Forest Service, 27pp. Water for Recreation—-Values and Opportunities. ORRRC Study Report 10. Washington, D.C.: U.S. Government Printing Office, 1962. White, William M. "The Economics of Sport Fisheries Management." Canadian Fisheries Report, No. 4. Ottawa: Department of Fisheries of Canada, May 1965, pp. 73-78. Wilderness and Recreation--A Report on Resources, Values, and Problems. ORRRC Study Report 3. Washington, D.C.: U.S. Government Printing Office, 1962. Other Documents Brown, William G.; Singh, Ajmer; and Castle, Emery N. An Economic Evaluation of the Oregon Salmon and Steelhead Sport Fishery. Technical Bulletin 78. Corvallis: Agricultural Experiment Station, Oregon State University, 1964, 47pp. Carolsfeld, Ludwig Schnorr von. "Arbeitszeit und kollektiver Arbeitsvertrag.“ Arbeitszeit und Freizeit; Nurnberger Abhandlungen zu den Wirtschafts- und Sozialwissenschaften, Heft 15, Februar 1961. Berlin: Duncker und Humboldt, pp. 149-160. 220 Clawson, Marion. Methods of Measuring the Demand for and Value of Outdoor Recreation. Reprint No. 10. Washington, D.C.: Resources For The Future, Inc., February, 1959. 36pp. Davis, Robert K. "The Value of Outdoor Recreation: An Economic Study of the Maine Woods." Unpublished Ph.D. dissertation, Harvard University, 1963, Summary. Knetsch, Jack L. Economics of Including Recreation as a Purpose of Water Resources Projects. Reprint No. 50. Washington, D.C.: Resources For The Future, Inc., January, 1965, pp. 1148-1157. Letter from Ross D. Netherton, Chief, Division of Research and Education, Bureau of Outdoor Recreation, U.S. Department of the Interior, December 2, 1970. Seifert, Arndt. "A Theory of Projects: Its Application to Death and Suicide." Unpublished paper, May 1966. Tfirnau, Georg. "Die volkswirtschaftliche und finanzwirtschaftliche Bedeutung der Schwarzarbeit" (Dissertation, Wirtschafts- und Sozialwissenschaftliche Fakultat der Universitat zu Koln; Joseph Hansen, Telgte, 1958. wmm HIT '5" APPENDICES 221 “Film--“fi, AP'PEND IX A 222 APPENDIX A The Theory of the Production of Time In the familiar labor-leisure choice model,l per- sonal time is commonly treated as a given, fixed endowment, which has only to be allocated to the alternatives of work (sold time) and leisure (own time). However, human time-~our next hour, day, week, etc.—-usually does not fall from heaven or is handed to us as a gift, human time has to be "produced" before it can be so allocated, i.e., it is costly itself. In order to live, in order to be able to work,2 to exchange sold time (ST) for income, we have to consume at least a certain minimum of life-preserving commodities and leisure: the "existence minimum." Failure to do so-- through voluntary self-starvation (suicide) or through an involuntary death of starvation, malnutrition, freezing, le. Lionel Robbins, op. Cit.; Gary S. Becker, op. cit. 2Carl S. Shoup, "Production from Consumption," Public Finance, Vol. XX, No. l—2, 1965, pp. 173—202, discusses the "changing relationship" between increments of consumption and increments of production. We assume here a minimum amount of consumption which would maintain the total product at its maximum. Cf. also: J. D. Owen. The Price of Leisure, op. cit. 223 224 thirst—-will ultimately (after a certain time lag)3 throw us out of the enterprise of time production or time prolon- gation (living) through premature death. Once we have been "thrown" into this world, our life becomes an "enterprise" for whose pure existence the pro- duction of additional time is the necessary but not the sufficient condition.4 As long as we are in the "infant industry" stage of our life cycle, at least, we produce our time through the aid and subsidy of external agents (parents, orphanages, relatives, etc.), who more or less "force" and train us into the habit and skill of time production through the consumption of certain bundles of goods. Having reached the stage ("take-off") from whereon we are self-sustaining, self-supporting, self—preserving and self-conscious "enter— prises," we will after a little reflection discover, that we have embarked upon a course--are members of an industry (of living)--not of our own choosing. However, once we have become self—conscious and mature individuals, we are 3Even the hunger artist who earns his living by minimizing the amount of food consumption or maximizes the time lag between food intake and exhaustion, can be an artist only for a certain period. 4The "profitability? of this enterprise will, above all, depend Upon the kind of projects, activities, in which we are engaged: the how, the style, the uniqueness, etc. ~with which we handle them. We produce time not for its own sake, but for something, in order to. . . 225 now also "ex post" £533 either to leave the industry (through suicide), or to affirm our "entry" (better "entered" entry), consciously or subconsciously. If we affirm to continue the enterprise, we are, in other words, perpetually choosing to produce time,5 literally, to consume our time into existence. The cost of time thus produced can best be illustrated through the aid of the following "growth model" (Figure 19). In quadrant I of our diagram, time in homogeneous units (here days)6 is plotted along the horizontal axis, so that the distances TOTl’ T1T2, a.s.o., each represents one successive day (24 hours) respectively. The line marked MPST represents the Marginal Propensity To Sell Time, which is shown to be equal to a constant fraction, 0 i m': l, of etc., i.e., m = MPST = 9&2 : l, where AST is the TOTl’ TIT ATT 2! change in sold time as a result of a change in Total Time _ 7 ° 3 along the vertical axis indicate these Sold Time changes. 5Which is a choice with at least a certain probability distribution of expected outcomes. Whether the alternative choice, i.e., death through suicide-—a choice with a completely uncertain "after"--can really be called a choice, can be questioned. 6We abstract here from "psychological" time units, which may be greater, equal, or smaller than our homogeneous clock-time units. 7ATT = AST + AOT ATT AST + AOT _ 1 ATT ATT ATT ’ AST _ _ AOT . m " l TTT ' l-ew _ AOT . . MPST = l - MPOT, where MPOT — KTT , IS the Marginal Propensity To Own Time. 226 .amUOE nuBOHm cofluoscoum mafia mnell.ma musmflm mic. 3 > . szzpwmtiza H H \ \ \ \ \ \ \ \ \ \ \ A ..H+ refit; \ x v... To. A A \L\ \ 4 Ar VANH \ \ NH _ \ \Og A \ .l ..I I. A “H A 04\ \r . 1 ...H L. \ >\\ v. _ > A 4 .H x \ owe \\I\i I mzoozn mat. $5.5 ..H I , I I 9:. ww<3 MIC. . V A Rah 0* NF B: ~\»< t N)‘ Wt —>Q. \ \ x . I \ V \r I l\ N \ v” \ p/ \ I \ f V N \ \ NW 1 \ \ V “W \ a x 29 \ \ \ \ \ t \ v \ H H NZE. AJOW my: 230 < 227 On the first day of his self-supporting working-life, we can assume our individual to be presented with a gift of TOTl hours (one day), of which he sells TOSl hours as work and reserves 8183 hours as own time (OT), for: (1) ST + OT = TT. At an hourly wage rate of P,,8 shown in quadrant II, he gppld_transform the total gift of TOS3 (= TOTl) hours into a potential wage income of PY' dollars: (2) (ST + OT) x PW = PY. However, as he chooses not to commit suicide through overwork—- more mildly, as he normally prefers not to overexhaust himself—-the individual actually only converts, e.g., T051 hours into an Actual Wage Income amounting to AY' dollars: (3) ST xpw = AY, (4) OT x PW = TY = PY - AY, (where TY is Time Income, i.e., the opportunity- cost of Own Time) reserving 8153 hours as own time. As he chooses to live and work the next day, a frac- tion (k) i l, of his Actual Income of AY' dollars must be Spent on food, shelter, clothing, etc., i.e., (k) stands here for the direct money expenditure part of his "existence minimum," to which must be added a minimum of TY' dollars (TY' = t x TY, for O i't : l), the opportunity-cost for own 8We could easily modify the analysis to account for higher overtime wage rates to be earned after a certain amount of ST. The basic idea intended to be illustrated, however, would not be changed at all. 228 time (sleep, rest, consumption-time, etc.). Quadrant III illustrates this aSpect of the model. Thus 1M gives us the fraction of his Actual Income AY‘, i.e., (5) AY' x k = IM, and TY' = t x TY = I' 9 the minimum amount of Time Income LI (TY), which must be invested by the individual, so that he is able to produce another day. The total investment in additional time (the next day) therefore consists of: I l _ I (6) IM + IL — I , dollars. Should I' be smaller than IE3 Min , where the latter is the existence minimum, then ATT will after a certain time lag—- which is maximal for a hunger artist--reduce to zero: death occurs. In quadrant IV we show the production function, which summarizes the physiological result of the working- mechanism of the living human body, i.e., an input of a minimal I', placed in, on and around the human body, is transformed by this body into the output of another work day (TlTZ): (7) T2 - T1 = f (I& + Ii), or in general: (8) Tn — Tn—l = f (IQ-l + I£_l), where n=number of lifetime days. We see that from now on the cycle is repetitive. 9The fact that (k) and TY may vary according to age, profession, season, etc., does not interest us here and does not change the substance of the analysis. It suffices, if (k) and TY represent averages. 229 1 As result we have found In— to be the cost of a time unit (Tn - Tn-l)' In other words, we need both time (consumption time, leisure) and money income to produce or to extend (maintain) our individual life—time. Human time as such is therefore not a free endowment.lO Subtracting time-production-costs from the value of the particular time period, we have: (9) (AY + TY) - (I + I M L) = H , the net time profit per day, or =7T (9') PY - (IM + IL) On the empirical side, the old difficulty of how to define and measurell adequately the existence minimum, of separating the time investment portion of consumption from the pure consumptive (utility) portion, may loom large, but can be partially handled by employing estimates of poor relief, general assistance payments, etc. Finally, the consequences for income taxation can here only be hinted at. To conclude, we have demonstrated that economic consumer theory must deal with three, not only two different, consequtive and interdependent choice situations: 1. The either-or, existential choice of living or not living, of time production or of taking the 10Even if I were subsidized by somebody else, then it is this other agent who will have to pay for my time. The same result holds true also in non—market societies. Here IM is replaced by the own produce of clan, tribe members, for instance. 11G. J. Stigler, "The Cost of Subsistence,‘ 9f Farm Economics, Vol. XXVII, 1945. Journal 230 industry exit, i.e., the Egonomics of suicide and the economics of living. The traditional labor—leisure, —better, Sold Time- Own Time- Income choice. The consumer choice prOper, i.e., the optimal allocation of a given income and time (OT) (from 2. above) among alternative goods. APPENDIX B 231 APPENDIX B Travel Time And The Price Of Leisure: A Critique In the spring 1966 issue of the Western Economic % l . Journal, M. Bruce Johnson has questioned the validity of specification of the neoclassical consumer—choice model between income (Y) and leisure (L), which treats either i leisure or work (W) as residuals, i.e.,: (l) U = U (Y, L), or U = U (Y, W). He concludes, . . . that a worker demands a wage rate as a compensation for sacrificing desirable leisure and for performing a disagreeable task. Thus work and leisure should both be included in the utility function so that a distinction between the marginal utility of leisure and the marginal disutility of work is made at the level of individual preferences (p. 140). In other words, Johnson specifies the utility function as follows: (2) U = U (Y, L, W). The main difference between the traditional utility function (1) and function (2) is made more apparent after differenti— ation of both functions with respect to work (W) subject to the time budget constraint: lM. Bruce Johnson, Western Economic Journal, op. cit. 232 233 (3) T0 = w + L, (T0 = a fixed time period), and the money budget constraint: (4) Y = PW x W, (PW = the money wage rate). Utility function (1) thus yields: (5) ——— = P (MU = Marginal Utility) and utility function (2): (6);;E=Pw+§iifl' €- Y Y ( MUW The crucial difference lies in the additional term MU_ , Y the marginal rate of substitution between income and work. MU If work involves disutility at the margin, MU—’ will be Y negative-—an assumption made by Johnson--and the money wage rate turns out to be an overestimate of the value of leisure (own time). Overinvestment in roads may be one of the Consequences . It is the purpose of this Appendix to demonstrate not only that utility function (1) is still the correct one and is analytically more complete than function (2), but that even when we accept the three variable utility function, some of the results which Johnson derives from it do not necessarily follow. 234 l. The Specification Error The major criticism must be concerned with utility function (2) which is clearly overspecified, in so far as (W) and (L) are strongly related variables: the utility of leisure is a positive function of the disutility of work and vice versa, i.e., leisure will be more desirable, the more disagreeable the work and the more desirable the leisure, the more disagreeable will be the work. This can be shown as follows: (i) The concept of leisure would be meaningless today, were it not for the implied existence of work or some other alternative of choice. To clarify the latter, let us imagine a state of terrestrial paradise in which all goods except time are free and where work is unknown. Under such conditions, the value of leisure time can not be derived from our work-leisure model, but from the opportunity cost of alternative foregone pursuits. In fact, the latter statement implies the more general formulation of the theory of value, for: Every valuation is a comparison; we have no conception of an absolute utility or an absolute standard of utility. The notion of value is meaningless except in relation to alternatives of choice. Not only is utility measured by another utility--all things are measured by things of their own kind as standards-- but its existence is conditioned by that of the alternative; . . .2 2 Chapter 3, p. 63. F. H. Knight, Risk, Uncertainty and Profit, pp. cit. ‘EEE' 2...- :“MH‘; N: 235 Returning to our non—paradisiac situation, we see that even a person who decides not to work at all, will value his leisure in comparison to the pessibility of work, whose (i.e., work's) existence as an idea is therefore a suf— ficient condition for the valuation process. If we agree that work as possibility and/or fact exists in our world and that around the margin, at least, work involves dis— E . .T . P‘- utility, it is impossible to separate the interdependent .'v‘ 5&2 work--and leisure variables, for: The value of the one is a function of the value of the other. The reason why one i more unit of leisure time is chosen instead of work time (at a constant money wage), is simply because the value of the additional unit of leisure outweighs the value of the unit of work foregone (i.e., income), and the reason why the marginal value of leisure thus exceeds the marginal value of work, results from the expected disutility of additional work. The value of leisure therefore already includes the disutility of work and is reflected in the slope of the indifference curve between leisure and income. To account, like Johnson does for the disutility of work separately amounts to double counting. The confusion probably rests in a difference between consciousness and conduct explained by F. H. Knight: while to the eye of critical scrutiny there is no 'logical' distinction between an increasing disutility eXperienced and an increasing utility foregone, a 'psychological' difference must be 236 admitted; there is no difference for conduct, but there is one for consciousness, to our pecuniarly SOphisticated consciousness at least.3 We cannot logically_distinguish between increasing dis- utility of work and increasing utility of leisure on the level of choice and conduct--the level which is relevant for economics—-and we must leave the remainder to psychology. The standard specification of the utility function as equation (1) thus is the correct one in avoiding double counting of mirror images, by setting either the marginal disutility of work or the marginal utility of leisure “rim-’32:. “5% equal to zero. 2. Fixed-versus Variable Disutility of Work Setting the marginal disutility of work equal to zero, however, does not necessarily exclude the disutility of work factor in another form from equation (1). Equation (5) would not be changed at all, if we were to introduce the disutility factor in equation (1) as a constant. In other words, we can imagine in analogy to the fixed cost— variable cost distinction of production theory, that the disutility of work dichotomizes into a fixed,—constant-and variable element. There exists a disutility of work which is independent of the amount of working time, i.e., whether I work one hour or eight hours per day, the disutility of reporting to work, of facing my superior, of being confronted ¥ 3Ibid., p. 67. 237 with a rigid distribution of leisure, the dirtiness of the occupation, etc., remains the same. This fixed disutility (or utility) of work, however, exerts greater influence on the attractiveness and thus on the choice of occupation, than it does on the labor-leisure choice once the occupation has been chosen.4 Johnson uses the concept of disutility of work in the variable sense (Compare his Figure l, p. 139), i.e., for him the marginal disutility of work increases at an increasing rate with increasing number of work hours. This may be due to the associated increased energy loss, increasing fatigue, beautiful weather, a.s.o. But the latter are not so much disutilities in themselves, but mainly result from a lack of leisure. The disutility of a specific kind of work which is not apparent during the early phase (even Johnson admits the possibility that work may be "desirable in 'small‘ amounts" [p. 137, n.7] before the equilibrium position is reached) of the work period (before equilibrium), but which increases with the increasing length of work, can only be due to an insufficiency of leisure, better, is due to a certain distribution of leisure (work). For if work periods were shortened to the point where the yariable disutilities make their 4The relative attractiveness of an occupation in turn finds its reflection on the supply side in the "equaliz— ing differences" of remuneration which may or may not be offset by demand forces. 238 appearance, i.e., if the distribution of work (leisure) were changed, we could eliminate the whole argument about the variable disutility of work. Dissatisfactions which originated with an unfavorable amount and distribution of leisure (work), appear disguised under the disutility con— cept. We are thus thrown back at leisure (its distribution) and have discovered a second explanation for the functional f relationship between the utilities of leisure and work and for the equality between the marginal utility of leisure and the marginal disutility of work. 3. The Distribution of Leisure, Overtime and'the value of Leisure The above argument has led us to the conclusion that the variable disutility of work component is a function of the distribution of leisure (work), i.e., the frequency, size and sequence of leisure intervals per period.5 Now ppph_functions (l) and (2) hold true only under a certain distribution of leisure, a fact that is, as we said, usually not noticed at all or is at most implicitly assumed. This was illustrated in Figure 8. Our analysis of overtime work showed that at least OVT W , or FH in premium a portion of the overtime wage rate P form, in our diagram 8, is paid to compensate the individual 5This does not necessarily imply that the fixed disutility component and the distribution of leisure may not also be correlated, in all probability they will be, as the amount and distribution of leisure (own time) are important factors in determining the attractiveness and therefore the choice of a particular occupation. 239 for an inferior distribution of leisure, which is another way of saying that FH dollars are paid as a compensation for the increased disutility of work. At most, GH might be looked upon as a premium paid to compensate for the increased disutility of work or the inferior distribution of leisure, otherwise no overtime would be worked.6 In all cases, the value of KK whether 1’ . . . 7 . . it is leisure, overtime or general own time, can never fall below GN or P usually will lie above. w! 4. Overemphasis of the Disutility ngWofk The disutility of work in comparison to its utility seems to have been generally overstated and overemphasised8 as a result of a universal human tendency to magnify hard- ships, the "bads" of life and to disregard too easily the positive and good parts. Although the disutility of work differs as to whep we look at it, i.e., whether before, during, or after work, 6If at all, then a marginal disutility of work discount must be made from the overtime wage rate and not, as proposed by Johnson, from the normal money wage rate PW. 7If our individual chooses leisure instead of overtime (KKl), then the eXpected increased disutility of work (inferior distribution of leisure) has increased his valuation of leisure at least by the amount of the premium(s). 8There exists some demoscopic evidence for the USA and Germany, that a secular improvement in the utility of work has occurred as a result of better working-conditions, etc. See: George Katona, et al., op. cit., pp. 152ff., espec. Tables 9-l, 9-2. 240 we usually concentrate our attention on the "before" and "during" perspective and thus follow the above tendency. The fact that we are commonly satisfied "after" work is done, is generally neglected. Taking account of ppph satisfactions and dissatisfactions of work, we will be left with either a pep or zero utility/disutility of work. Another factor which should minimize the disutility of work for a person when we assume free entry into the occupation, is that . . . "everybody will perform the work he likes most (or dislikes least) and is best fitted for."9 Some of the disutilities of work may have been already compensated through additional amounts of leisure (own time), e.g., in the case of teacher vacations. Furthermore, the collective bargaining power of individuals as a group will tend to . . . "adjust working conditions and hours to the preferences of the worker.10 Turning Johnson's argument around to take account also of those individuals who suffer no disutility of work but who enjoy positive utility of work instead, the term MUW MU~ in equation (6) will be positive and P will truly be Y W an underestimate of the Value of leisure (OT). 9T. Scitovsky, op. cit., Chapter 5, p. 97. 1OM. Friedman, 0p. cit., Chapter 11, p. 205. ..u_ 'vu‘ ‘ ‘3‘... 1 241 With reference to the measurement of primary OR- benefits, the money value of the total time price "paid" at an OR site per year, would now depend upon (assuming Johnson's specification of utility function to be true for spme outdoor recreationists): a. the relative number of recreationists enjoying utility of work and those suffering disutility of work, b. the relative subjective intensities (degrees) of these utilities- or disutilities of work, measured indirectly in terms of possible money compensations, c. the relative number of visitor—hours spent by the "utility- and disutility recreationists," respectively, d. the relative wage rates of disutility—and utility recreationists. (The same analysis applies to other public investments, like that of road investment. In the latter instance, we would only have to substitute "travelling people" for outdoor recreationists.) 5. The Direct Price of Leisure As we have seen, the total price of OT (leisure) is made-up not only of an indirect (wage-opportunity-cost) estimate, but OT has also, in most cases, a direct price 242 (cf. Chapter IV, 6), which is, e.g., the price paid for time-saving (leisure creating) goods. Going back to Figure 18 and equation (11), we must infer that--even if we would for a moment assume Johnson's utility function (2) with its negative marginal disutility term--it would ultimately depend upon the relative size of MU P and — ——E- to decide whether P is an overestimate of ws MUY W the value of leisure or not. I1: '9' 91 his APPENDIX C 243 APPENDIX C Visitor-Day Statistics Outdoor recreation visitor-hours represent the raw material for our measurement of primary OR—benefits. According to the Recreation Advisory Council Circular No. 6,1 beginning with calendar year 1965, all Federal agencies shall 2 report public recreation use in terms of visitor—days. A visitor-day_is defined as: Twelve visitor-hours, which may be aggregated con- tinuously, intermittently, or simultaneously by one or more persons. A Visitor-hour is defined as: The presence of one or more persons on lands or waters, generally recognized as providing outdoor recreation, for continuous, intermittent, or simultaneous periods of time aggregating 60 minutes. The implementation of the policies contained in Recreation Advisory Council Circular No. 6 so far . . . "has been very uneven. The U.S. Forest Service has had extensive visitor-day figures by recreation area available for the past few years, and the Bureau of Land Management has been increasing its data-gathering effort. Figures for the other 1Recreation Advisory Council Circular No. 6, op. cit. 2Cf., "A Uniform Method For Measuring And Reporting Recreation Use On The Public Lands And Waters Of The United States," op. cit. 244 ‘ 9m Twit 2.2.9.051“: I Odni ' ‘1 T. ~ .- .., _ 245 agencies--where available at all—-have been derived from 'number-of-visits' estimates by the application of judg— mental conversion factors. Moreover, these estimates are seldom broken down by recreation area."3 Since the Forest Service has played a leading role not only in the conceptualization of the new visitor-day statistics, but also in the implementation of Circular No. 6, we have, for demonstrative purposes, included some of these statistics in this Appendix. Also included is a g sample source document for field reporting of recreation i use. The reader who is interested in the Visitor-day measurement techniques and methods, is referred to the following selected documents: 1. Harold K. Cordell, George A. James, and Russell F. Griffith, Estimating Recreation Use at Visitor Information Centers, USDA Forest Service Researeh Paper SE—69, Novemberil970, Southeastern Forest Experiment Station— Asheville-North Carolina, U.S. Department of Agriculture, Forest Service, 8pp. 2. J. Alan Wagar, Estimation Of Visitor Use From Self—Registration At Develpped Recreation Sites, USDA Forest SerVice Research Paper INT-70, 1969, Intermountain Forest And Range Experiment Station, Ogden, Utah, U.S. Department of Agriculture, Forest Service, 27pp. 3. George A. James, Pilot Test of Sampling Procedures for Estimating Recreation Use on Winter-Sports Sites, USDA Forest Service Research Paper SE-42, September 1968, Forest Service, U.S. Department of Agriculture, Southeastern Forest Experiment Station, Asheville, North Carolina, 8pp. 3Letter from Ross D. Netherton, Chief, Division of Research and Education, Bureau of Outdoor Recreation, U.S. Department of the Interior, December 2, 1970. 246 4. George A. James and Gary L. Tyre, Use Of Water- Meter Records To Estimate Recreation Visits And Use On DevEIoped Sites, U.S. Forest Service Research Note SE-73, April 1967, U.S. Department of Agriculture, Forest Service, Southeastern Forest Experiment Station, Asheville, North Carolina, 3pp. 5. George A. James, Instructions For Using Traffic Counters To Estimate Recreation Visits And Use On Developed Sites, April 1966, U.S. Department 6f Agriculture, Forest SerVice, Southeastern Experiment Station, Asheville, North Carolina, 12pp. 6. George A. James and Robert A. Harper, Recreation Use of the Ocala National Forest in Florida, U.S. Forest Service Research Paper SE-18, June I965, 28pp. 7. George A. James and Thomas H. Ripley, Instructions for Using Traffic Counters to Estimate Recreation Visits and Egg, U.S. Forest Service Research Paper SE-3, March 1963, Forest Service, U.S. Department of Agriculture, Southeastern Forest Experiment Station, Asheville, North Carolina, 12pp. 8. Leslie F. Marcus, Ernest M. Gould, Jr., and Richard L. Bury, Measuring the Recreation Use of National Forests, 1961, U.S. Forest—EerVice, Pacific Southwest Forest & Range EXperiment Station, Tech. Paper 59, 26pp. sii/Wx-’ smut”. ". ‘ 2447 Estimated National Forest Recreation Use Service-Wide Summary, C.Y. 1969, by Activities. PUBLIC USE ACTIVITY VISITOR-DAYS_L/ 9000501 cm ING . 4I,629, 700 25.5 PICNICKING 6,037,700 4.2 RECREATION TRAVEL (HECHANIZED) 37,032,000 23.2 AUTOMOBILE (34,290,200 (2I.o%) SCOOTER & MOTORCYCLE (I,75I,400 (I.IS ICE 4 suowranrr (I,050,300 (.92; OTHER (230,I00 (.Ix BOATING ' 4,207,300 2.6 rowan EOATS (3,0II,300g (I.sx; SELFnPROPELLED BOATS (I,250,000 (.0? cruss 3 TFAH 090010 585,500 .4 wAIcnstInc a 07050 WATER 990010 603,900 .4 35.002000 0. 0000A DIVING 2,932,000 I.0 WINTER 590019 5,099,000 3.7 sxluns $4,773,400) (2.9;; 07059 l,l2(,200 (.79 rIsuIne I4,009,200 9.2 HuNTING I4,I47,900 8.7 HIKING a niunrAIu CLIMBING 4,902,400 3.0 HORSEBACK RIDING 2,I70,500 I.3 050001 35 4,033,200 2.5 ORGANIZAIICNAL CAP? use 4,324,000 2.7 RECREATION BESI 3:05 005 - 0,0I5,200 4.9 GAIHERIHG roassr 05000079 I,440,900 .9 N/ITUh'E STUDY 878,000 .5 VIEWI'G 8090297, 090013, EHVIROHMEHT 5,542,700 3.4 VISITOR INFORMATION (EXHIBITS, IALKS, £70.) I,86?,600 I.I lp_$ESVICE TOTAL (DISTRIBUTED 10 ACTIVITIES ABOVE) l62,838,l00 I0m5 1Recreational use of N.F. land and water which aggregates 12 person-hours. May entail one person for 12 hours, 12 persons for one hour, or any equivalent combination of individual or group used, either continuous or intermittent. 248 Estimated National Forest Recreation Use Service-Wide Summary, C.Y. 1969, by Kinds of Sites and Areas. PLACE wRERE USE OCCURRED ' PUBLIC USE VISITOR-DAYS.L/ PERCENT .QEVELOPCQ_§I[§§ ORSERVATIOR 807,700 .5 PLAYGROUNDS, PARKS, SPORTS SITES 34,400 ‘g/ BOATIAC SITES I,330,2oo .8 S':JII'I~III.'G SITES I, I07,800 .7 CAIR‘GROUI'IDS 3I,669,600 09.4 PICNIC GROUNDS 4,802,200 2.9 HOTELS, LODGES, RESORTS 4,00I,200 2.5 F.S. ORREO - 353,500 PVT. 00050 - 3,557,700 ORGANIZATION SITES 5,770,500 3.5 F080 Osa'i‘hED - 573,900 PVT. ORREO - 5,258,000 CONCESSION SITES “3,600 .03 RECREATION RESIDENCE SITES ' 7,99I, 400 4.59 WINTER SPORTS SITES 5,56I,800 3.5' VISITOR CENTERS I40, I00 ol SUBTOTAL, DEVELOPED SITES 63,740,300 39.! .QISPERSED'AREAS ROADS (RECREATIOR) 39,738,400 23.0 TRAILS (RECREATION) 5,573,000 3.4 RATERS (ALL RECREATION STREAMS, RIvERS, lAKES, RESERVOIRS, ETC.) 20,277,800 I2.5 GENERAL UROEVELOPEO AREAS 34,508,800 2I.2 SURTOTAL, DISPERSEO AREAS 99,097,800 00.9 L SERVICE-WIDE TOT/II. I62,838,I00 I00% ] lRecreation use of N.F. land and water which aggre- gates 12 person-hours. May entail one person for 12 hours or 12 persons for one hour, or any equivalent combination of individual or group use, either continuous or inter- mittent. 2Less than .05%. 249 Estimated National Forest Recreation Use of Classified Areas C.Y. 1969, by Activities. ESTIMATED VISITOR-DAYS OF USE_y/ ACTIVITY NATIONAL WILDERIIESSES SPECIAL- ' RECREATION 6: PRII'IITIVE INTEREST AREAS AREAS AREAS 324 CAMPING 723,000 I,858, 900 22 I,000 P ICNICNIIIG 24,500 2 I, 700 35,500 RECREATIONAL TRAVEL (MECHANIZED) 754,000 30, 400 20I,7Do BOATING 272,800 200,800 28,500 GAMES 7. TEAM SPORTS 800 ...- .... IIIATEIISKIING 6. OTIIER I'ATER SPORTS I7,400 - I, I00 SIJIIZ'IIIIG 8. 5003A DIVINE; 00,300 43,700 22,300 NIIITEII SPORTS ..-- 2,400 I3,Doo FISIIIIIG 238,900 80:,900 I03,5oo IIUNT I I16 74, 400 480, 000 59,200 HIKING A HOLIIITAIN CLIMBING 39,400 595,300 I85, I00 IIORSCBACEI RIDING 8,500 249,000 8,900 RESORT USE I09, 700 I00 59,800 ORGANIZATIONAL CAN” USE 34,I00 -— 300 RECREATION RESIDENCE USE 40,700 .... I00 GATHERING EOREST PRODUCTS 3, I00 2I,500 .. NATURE STUDY 5,Ioo 88,900 2I,800 VIEwINC SCEII'ERY, SPORTS, ENVIRONMENT I33,800 «9,800 295,800 VISITOR INFORMATION (EARIRITS, TALKS, ETC.) 2I,9OD I4s,300 I49,300 l__TOTAL, ALL COMPONENTS 2,507,200 550733509 n.4065800 lRecreation use of N.F. land and water which aggre- gates 12 person-hours. May entail one person for 12 hours, 12 persons for one hour, or any equivalent combination of individual or group use, either continuous or intermittent. 2Use of classified archeological, botanical, geological, historical, memorial, and scenic areas. 250 Estimated National Forest Recreation Use of Classified Areas C.Y. 1969, by Kinds of Sites and Areas. ESTIMATED VISITOR-DAYS OE USE y ““0 0F 5'75 “‘9 “‘5‘ NATIONAL wILDERNESSEs SPECIAL RECREATION A PRIMITIVE INTEREST AREAS AREAS AREAS g/ DOSERVATION SITES I3,ooo - 99,900 PLAVCROUND, PARK, SPORTS SITES .... .. .. 80ATII:0 SITES “5,400 ...- 5,I00 SNIAPIIIIC SITES 7,800 --.. .. CAI-TGINIIII‘IDS 080, I00 59, 500 227,200 PICNIC 0800003 I3,300 -- 3I,800 ROTEI.S, LDDcES, RESORTS 48,IOO ... 8I,000 DRCANIZATIONAL SITES 29,900 .— 2, 400 OTHER CONCESSION SITES «5,000 I00 «..- RECREATION RESIDENCE SITES 40,700 ...... I00 NINTER SPORTS SITES --.. - I2,500 VISITOR CENTERS, REC.~ORIENTED 5,300 ... 9,900 ROADS, RECREATION 858,800 .. I98, 700 TRAILS, RECREATION 50,200 920,.00 I55,Ioo IIATERS, RECREATION 458,800 I.058.Ioo I49,5oo GENERAL UNDEVELOPED AREAS 225,800 3,034,.IOD 453,800 L TOTAL, ALL COWONEIITS 2,567,200 I 5,07I,900 J I,405,800 lRecreation use of N.F. land and water which aggre- gates 12 person-hours. May entail one person for 12 hours, 12 persons for one hour, or any equivalent combination of individual or group use, either continuous or intermittent. 2Use of classified archeological, botanical, geo- logical, historical, memorial, and scenic areas. 251 U.S. Department of Agriculture, Forest Service, Recreation Use of the National Fgregtg. _, VISITS-C.Y. 1924-1954 3" Calendar Campgrounda Picnic 9111:" Sports Hotels and Recreattdn Other For“: Total Year Groundu Stu-a R°3°r.‘.".._£921f”n£c.:‘~ Area 1924 1,588,489 1,871,534 -- 1,018,541 181,825 -- 4,550,389 1925 2.129.948 2.085.717 -- 1,151,550 243,851 -- 5,522,205 1925 2,055,742 2.403.411 -- 1,318,955 255,149 -- 5,044,257 1927 1,845,709 2,523,508 -- 1,350,123 317,373 -- 5,135,813 1928 1,845,593 2,937,511 4- 1,381,595 385,518 -- 5,550,317 1929 1,902,951 3,055,455 -- 1,795,851 375,780 -- 7,132,058 1930 1,980,735 3,272,582 -- 1,330,510 325,895 -- 5,910,924 1931 2,193,856 3,755,025 -- 1,518,450 495,555 -- 8,073,917 1932 2,178,231 4,048,795 -- 1,138,534 530,182 -- 7,395,383 81933 2,219,804 4,355,935 -- 1,037,095 552,885 -- 8,155,521 81934 2,343,132 4,510,171 -- 1,014,008 513,495 -— 8,580,805 .1935 2,395,558 5,325,037 -- 1,258,998 727,537 -- 9,718,330 91935 2,421,275 5,811,720 -- 1,712,134 835,965 -- 10,781,094 41937 2,835,040 5,973,930 -- 2,155,329 857,359 -- 11,832,558 *1938 3,181,817 7,527,914 -- 2,759,224 927,319 -- 14,495,274 1939 3,157,490 7,019,180 1,289,211 1,987,812 878,168 -- 14,331,851 1940 3,583,091 7,931,485 1,538,432 2,257,548 852,411 -- 15,152,957 1941 3,349,898 5,818,953 1,519,054 1,917,705 501,280 4,797,815 18,004,785 1942 1,771,340 3,300,532 993,920 1,135,271 379,599 2,825,358 10,407,120 1943 1,095,212 2,050,384 255,755 679,863 244,395 1,938,050 5,274,559 1944 1,245,758 2,051,077 287,425 715,359 370,173 2,481,140 7,151,953 1945 1,814,928 2,729,375 527,291 1,271,359 505,953 3,225,102 10,074,089 1945 3,055,114 4,458,748 1,249,200 2,285,107 713,359 5,478,128 18,240,577 1947 3,518,147 5,252,500 1,725,575 2,110,405 525,978 8,177,945 21,339,751 1948 3,424,088 5,582,158 2,284,943 1,928,755 572,499 9,118,520 24,010,954 1949 3,837,010 7,559,234 1,712,507 1,929,597 515,242 10,375,555 25,080,255 1950 3,858,845 7,577,575 1,504,575 1,902,140 527,481 11,897,181 27,357,797 1951 4,140,855 8,559,341 1,929,270 2,133,574 535,173 12,440,928 29,950,252 1952 4,527,979 9,515,925 1,758,083 2,509,195 570,532 14,014,079 33,005,885 1953 4,810,341 10,335,910 1,944,193 2,554,219 758,493 14,989,894 35,403,050 1954 5,805,130 11,457,849 2,352,429 2,990,244 854,559 15,812,805 40,304,037 1955 5,795,705 12,418,342 2,977,220 3,230,840 853,332 19,425,409 45,712,858 1955 7,204,985 14,557,225 3,040,513 4,128,912 851,474 22,552,973 2,555,084 1957 8,352,350 15,138,599 3,158,575 4,211,482 828,550 28,257,498 50,957,273 1958 9,324,700 17,845,200 4,127,000 4,117,309 850,400 32,184,900 58,449,500 1959 9,955,890 19,283,300 4,184,100 4,597,400 895,300 42,504,100 81,521,000 1950 10,878,000 19,500,800 4,705,800 4,575,500 1,114,200 51,519,200 92,594,500 ,835 100 20,455,800 4,478,300 5,309,900 1,175,500 58,555,800 101,912,500 iggi Ii,94o:9oo 21,283,500 5,575,800 I 5,151,599 1,183,900 55,515,500 112,752,200 1953 13,552,500 21,575,400 5,577,500 4,917,003 1,347,900[ 74,501,500 122,582,000 ABM“ .__.1’°.L1.5.2_1_1.09-I 1115.1919032"119113.990.__-I_517_1_217.Q‘l EDA-725126.99 11.195.21.400 1331762 . 300 ““XISITORZRAYS‘li‘E’YL‘!?92:1292"“‘"°TT 101 5“?"3 O 150 33‘ 100 “" 4 040 000 5,5377§NS" 5.4817588 3,791,790 9,820,SO= , 1 , 0 , 5, i355 32:554:100 4,703,380 4,842,500 I4,057,908 7,955,500 95,494,400 150,723,900 1957 30 230 700 4,509,500 5,102,300 3,905,500 7,5 9,900 93,109,.00 149,547,100 1958 30.665:100 4,523,400 5,554,000 3,978,400 8,143,900 103,593,500 155,555,300 1959 31:559,500 4,802,200 5,551,800 4,011,200 7,991,409 108,781,900 162,838,100 1Recreation use of National Forest land and water which aggregates 12 person-hours. May entail one person for 12 hours, 12 persons for one hour, or any equivalent combination of individual or group use, either continuous or intermittent. 2552 «all — .E-n .Jd 5%. Slur.l°llu m .2 — 20mz:.m m: _. _ 1 9.4.55.3: .. 2:00.55 05:03.. ,0 :: L 34.5 :1 no)... 2 8: oz 055 x 23 d." a: A>J ~Z235! >m um: I. A 3.... :.....3:32.. m>A‘” v .345 w .31: 5 , I _ L 3...: I 1 h a ll ' 1. 3.62 m 1. w z p «3&5 oz_4o>o_m * m1_ :7»! 1'1 l I no5u_5 oz< xo<0.¢0._..m_> m a w om wz_4_ r ZOEREEOLZ. mmD I ZO_.r