When time is money: The effect of hourly payment on the evaluation of time

Empirical research shows decisions about time are often made differently than decisions about money, belying the oft-quoted maxim that "time is money". However, there are organizational practices such as payment on the basis of time that can make the equivalence of time and money salient and are associated with an economic evaluation of time. Study 1 showed that people paid by the hour applied mental accounting rules to time that are typically only applied to money. Using data from a nationally representative survey, Study 2 documented that people paid by the hour weighed economic returns more strongly in making tradeoffs between time and money. Study 3 showed that participants' prior exposure to hourly payment was associated with a greater willingness to trade more time for money and that participants randomly assigned to calculate their hourly wage rate expressed greater willingness to trade more time for money. The interaction of prior experience with whether or not participants calculated an hourly wage in predicting participants' willingness to trade more time for money was fully mediated by the salience of economic criteria in participants' decision-making. (c) 2006 Elsevier Inc. All rights reserved.