Time banking

 Here's the latest Freakonomics podcast, on time banking. Dubner interviews some proponents, and a skeptic. I was the skeptic. It's not that I think time banking is a bad idea, I think it's a good idea, but a good idea like Esperanto, not a good idea like money... 

The World’s Most Valuable Unused Resource. It’s not oil or water or plutonium — it’s human hours. We’ve got an idea for putting them to use, and for building a more human-centered economy. But we need your help.

One of the proponents is Andrew Yang.

Here's an excerpt from the transcript

"YANG: Yeah, the best example I can use is that punch card at your local deli where you get 10 sandwiches, and you get the 11th for free. That has a place of honor in your wallet. And you get really excited when you get close to the free sandwich. If you can imagine a version of the deli punch card for showing up to all sorts of things like that’s the vision. Americans love points. Americans love rewards. Americans love stuff. I have these reward points on my Amex, and it’s mesmerizing, even though right now, it doesn’t cost them anything because I’m not going to redeem it because I’m hoarding for — I don’t know what I’m hoarding for. That’s really the core idea, is that if you give Americans cumulative rewards for doing awesome stuff, you’ll see more awesome stuff.

Okay, so who could possibly be against a scheme that rewards people for doing awesome stuff? Well, there is a certain Nobel Prize-winning economist.

ROTH: Some people’s time might be more valuable than other people’s.

That’s coming up.

*      *      *

As appealing as the idea of time banking is to me, and to Andrew Yang, most economists think that money is a much better measure of value than time. Here, again, is Al Roth.

ROTH: Time is an interesting commodity, and we buy and sell it all the time. When you hire a lawyer, he bills you by the hour. You give him money for his time and expertise. You might hire someone to house-sit for you, and water your plants while you’re away. So we trade time a lot, but not for time. And part of the reason is that time is sort of a clunky commodity. It’s a lot easier to trade other things.

DUBNER: But why is it so clunky? I mean, just as a dollar is a dollar, an hour is an hour.

ROTH: Well, one of the things we worry about with monetary markets is, some people have more dollars than other people do, and that gives them more access. And maybe we don’t always feel great about that. And so I think some of the charm to people who are charmed by time banks is that everyone has 24 hours in a day. But, you know, a working mother of three kids has less time than a retired banker who has a cleaner coming to his house, and a gardener. So not everyone has the same amount of time. And it’s clunky because it’s also hard to transfer. There’s the joke about the lawyer who goes to see a dentist, and the dentist fills his cavity in 10 minutes. The lawyer says to him, “You make more per hour than I do.” And the dentist says, “Would you prefer that I took an hour?”

DUBNER: So we solicited a few other economists to come on the show to talk about time banking. One of them, who shall go unnamed, wrote back to say: “The more I think about it, the more I think it is the dumbest idea in the world.” So do you hate the idea as much as that economist?

ROTH: I don’t hate it as much as that economist. By and large, I think that finding more opportunities for valuable exchange, for exchange that improves welfare on both sides, is a good thing. So I certainly have nothing against swapping time for time. I just don’t think of it as a scalable way to run a significant part of the economy.

DUBNER: The reason the idea appeals to me is because I’ve spent a lot of time with people like you, economists. And when you get a little bit off the beaten path, you start thinking about things like shadow time, right, the hours I have when I’m not on the clock, and what they’re worth to me and how I could spend them. And then I also just think about human capital, which economists are always going on and on about. It feels like that’s the purpose of a lot of economic research these days, is to show how important it is for people to build human capital through education and social networks and so on, because human capital is indeed really valuable. But then when I look around the world, I see so much surplus, dare I say, wasted human capital. People who are able to do things that may not be that valuable in a regular market circumstance, and may not even be that valuable to them, but might be very valuable to other people. And wouldn’t it be wonderful to find a way to give value to that surplus human capital? I mean, if you add it all up, that could be the biggest natural resource in the world, worth more than all the petroleum and other mineral products combined. And then I thought, well, who out there in the world would appreciate that more than Al Roth, who recognized that there is surplus sitting around in people’s bodies, for instance, in the form of a second kidney, and found a way to set up a system to make those extra kidneys available. So does that make time banking a tad more viable in your view?

ROTH: Well, I already said that I am in favor of looking for ways to increase valuable exchanges. So when time for time works, that’s great. But when you talk about human capital, you’re already suggesting that on some tasks, some people’s time might be more valuable than other people’s, because they have more human capital. And that’s what makes time clunky, if all we’re doing is swapping time. You know, I live on a college campus, so we trade time all the time, by inviting people to dinner. And then they invite us back to dinner. Dinner is sort of time, you expect you’re going to spend two, two-and-a-half hours with people and create connections that can’t be monetized. And it’s part of what makes life worth living. And if they had to eat and run, it would be a less-successful dinner. 

...

DUBNER: But I could imagine a scenario where, let’s say, there’s a person running a roofing business, maybe they’re second- or third-generation even. And they’ve decided that the way forward is to do solar installations. You’re in California. I’m sure there’s a big market for that there. But they don’t really know how to set up their business to optimize for that. They don’t know what kinds of partnerships, and maybe there’s some tax strategy, and just setting up the business that they’re not clear on. But boy, Professor Roth, he loves to talk to people about problems like that. And he also needs a new roof. So that sounds like a really nice possible exchange that could happen in the time bank. Would you be open to discussing that?

ROTH: I’d be open to discussing it.

DUBNER: He said, reluctantly.

ROTH: I say reluctantly because I certainly wouldn’t want that to be the only way I could get my roof repaired. "