Notes on Time as a Unit of Measure

Time as an economic unit of measure, could bring needed clarity to the now mysterious nature of what the real economy actually consists of. Healthcare is a notorious example, how difficult it has become to determine productivity and long term growth potential. In a recent post, Scott Sumner also stressed that the intangible nature of healthcare is just one factor which distorts the utility of RGDP measure:

...NGDP is at least an order of magnitude more clearly defined and more easily measured  than RGDP.

Even the term "real" has been somewhat of a misnomer in the measure of GDP. At a lecture for the Bennett Institute, Diane Coyle highlighted an explanation given by Thomas Schelling:

What we call "real" magnitudes are not completely real, only the money magnitudes are real. The "real" ones are hypothetical.

Despite their centrality to economic activity, statistics such as RGDP and NGDP are only useful up to a point. Hence Sumner also emphasized:

Most importantly, don't ask any statistic to do more than it can. 

At the very least, NGDP is simpler because it is the monetary expression. In the above linked lecture, Coyle explains how the real economy might be envisioned:

The philosophical base of GDP is utilitarianism. It measures current period flows of income, consumption, investment and trade. Assets contribute to economic welfare only when the services they provide are consumed.

It's fortunate we don't have to measure asset wealth as a component of the real economy, especially since asset wealth from previous time periods can be quite misleading in terms of revenue flow potential. Plus, at a time when tradable sector activity often requires less capital or overhead to achieve profits, much more capital than what is actually necessary is often required, before vital time based services are even implemented. Healthcare and education in particular are burdened by extensive regulations which create additional overhead costs. And because of the centrality of healthcare, its additional costs become burdens throughout the entire economy.

Importantly, overhead costs tend to overwhelm the revenue capacity these requirements actually make possible, in non tradable sector time based services. Further taxation, redistribution, and debt have carried the burdens wherever revenue potential leaves off. Perhaps this partly explains why services product remains poorly measured. Again, Diane Coyle:

The industrial and occupational classifications provide startling detail on manufacturing industry and almost none on the services that make up four fifths of the modern economy.

This level of services dominance makes it clear that services generation could benefit from a stronger, yet simpler statistical and organizational approach. In Scott Sumners's post, the debate on the growing mystery of what healthcare is supposed to even accomplish, continued in the comments section. For instance, how does one determine the value of prolonging life as long as possible, when doctors suggest treatments for incurable forms of cancer?

Let's say you "prove" that cancer treatment adds 4 months to a lifespan. Is that good? How do we determine if it's good? Do we use revealed preference? Utilitarian measures? And if it is good, how do we determine "how good". What is the value of four extra months when suffering from cancer. I'm willing to believe the benefit might be huge or tiny. I just don't know. There are lots of imponderables here.

When we try to decipher healthcare in ways which aren't specifically market related, the mystery only seems to deepen. Part of the problem is that so many aspects of healing and well being - prior to the professionalism of the twentieth century - were extremely diverse and multi-faceted. These conceptual universes and their associated activities were shared by average citizens, which meant the inclusion of diverse levels of skill, knowledge and approach. Too much of practical value was gradually stripped away, in the ongoing attempts to professionalize what were previously basic aspects of human life and mutual assistance, not to mention personal curiosity and intellectual challenges. Much of this was gradually and reluctantly surrendered to others who were better positioned in society, yet it has never been an easy matter to convey to others how such losses actually felt.

One can only imagine: For many students and practitioners of life, how must it have impacted their daily existence? To take for granted an active participation with others in intriguing aspects of applied knowledge, only to face an ever growing pressure to stop doing so, once the practices of applied knowledge were reserved for far away prosperous cities and distant buildings with seemingly impenetrable walls. A light which had long illuminated human imagination and motivation, assumed a more limited and somehow physical presence, in hallowed halls which many would be students of life would never have the chance to see.

Time as a unit of measure, could provide ways to restore what were once informal means of mutual assistance and personal challenge, but in a much needed economic framework. Time as measure, could become like a vase to once again hold the potential of applied knowledge for average citizens wherever they may happen to live, or regardless of their current level of resource capacity.

Various aspects of healing are just one part of life which could benefit from a statistic which records how people ultimately choose to coordinate their time priorities and preferences over extended periods. While some suggest new statistics which measure factors such as happiness and well being, those potential measures are mostly envisioned as alternatives to GDP. Whereas economic measure of time value could be more practical, for the new statistic would instead make room for shared experiences as an additional component of GDP. How much happiness and well being might even ultimately be derived through such a statistic, as millions of individuals finally regain freedom, personal autonomy, and meaningful challenges in their economic lives?

A primary reason for adopting time as a unit of measure, is that doing so allows us to record and build upon what we experience in shared interactions with others. GDP classification for time arbitrage could be expressed via roles such as coaching, mentoring, mutual corroboration, etc., instead of more specific aspects of applied knowledge and skill which are closely associated with professional time based product. When assistance takes place on voluntary terms, these informal - yet economic - roles could allow individuals and groups alike to benefit from assets being utilized in other capacities as well. When assets provide multiple contexts, more services output can be derived via greatly reduced overhead costs.

Ultimately, everyone needs better means to manage their own time scarcities, than what presently exist. When time isn't actually counted or measured as a valid economic component, too much time value potential is unseen, unappreciated, and consequently lost. As Diane Coyle emphasized, "we see what we count and not the other way around." Adopting time arbitrage as a means of measure, makes it possible to tap vast reservoirs of hidden wealth, in the form of human capital. Of course, these are just a few of the reasons doing so could prove worthwhile. There are doubtless many more.