Working paper series valuing the time of the self-employed

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. Daniel J. Agness University of California at Berkeley dagness@berkeley.edu Travis Baseler University of Rochester travis.baseler@rochester.edu Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 and NBER chassang@princeton.edu Pascaline Dupas Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305-6072 and CEPR and also NBER pdupas@stanford.edu Erik Snowberg David Eccles School of Business University of Utah Salt Lake City, UT 84112-8914 and University of British Columbia and also NBER Erik.Snowberg@ubc.ca