All CDDRL Publications Working Papers

Valuing the Time of the Self-Employed

Pascaline Dupas and co-authors Agness, Baseler, Chassang, and Snowberg leverage individual choice data they generate on farmers in western Kenya to solve a general problem: do behavioral phenomena drive individual choices when trading off cash for time, or cash and time for goods?

February 22, 2022

People’s value for their own time is a key input in evaluating public policies: evaluations should account for time taken away from work or leisure as a result of policy. Using rich choice data collected from farming households in western Kenya, we show that households exhibit nontransitive preferences consistent with behavioral features such as loss aversion and self-serving bias. As a result, neither market wages nor standard valuation techniques (such as the BeckerDeGroot-Marschak—BDM—mechanism of Becker et al., 1964) correctly measure participants’ value of time. Using a structural model, we identify the mix of behavioral features driving our choice data. We find that these features distort choices when exchanging cash either for time or for goods. Our model estimates suggest that valuing the time of the self-employed at 60% of the market wage is a reasonable rule of thumb.