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Time and Money: Substitutes in Real Terms and Complements in Satisfactions

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  • J. Bonke
  • M. Deding
  • M. Lausten

Abstract

Time and money are basic commodities in the utility function and are substitutes in real terms. To a certain extent, having time and money is a matter of either/or, depending on individual preferences and budget constraints. However, satisfaction with time and satisfaction with money are typically complements, i.e., individuals tend to be equally satisfied with both domains. In this paper, we provide an explanation for this apparent paradox through the analysis of the simultaneous determination of economic satisfaction and leisure satisfaction. We test some hypotheses, including the hypothesis that leisure satisfaction depends on both the quantity and quality of leisure-where quality is proxied by good intensiveness and social intensiveness. Our results show that both the quantity and the quality of leisure are important determinants of leisure satisfaction, and, since having money contributes to the quality of leisure, this explains the empirical findings of the satisfactions being complementary at the same time as the domains are substitutes. Interestingly, gender matters. Intra-household effects and especially individual characteristics are more pronounced for women than for men for both domain satisfactions. Additionally, good intensiveness is more important for men (e.g., housing conditions), whereas social intensiveness is more important for women (e.g., the presence of children and participation in leisure-time activities).

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Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_451.

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Date of creation: May 2006
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Handle: RePEc:lev:wrkpap:wp_451

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Cited by:
  1. Joachim Merz & Tim Rathjen, 2009. "Time and Income Poverty - An Interdependent Multidimensional Poverty Approach with German Time Use Diary Data," FFB-Discussionpaper, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg 79, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
  2. Merz, Joachim & Rathjen, Tim, 2011. "Intensity of Time and Income Interdependent Multidimensional Poverty: Well-Being and Minimum 2DGAP – German Evidence," IZA Discussion Papers 6022, Institute for the Study of Labor (IZA).
  3. Joachim Merz & Henning Stolze, 2010. "Kumulation von Querschnitten - Evaluierung alternativer Konzepte für die kumulierten laufenden Wirtschaftsrechnungen 1999 bis 2003 im Vergleich zur Einkommens- und Verbrauchsstichprobe 2003," FFB-Discussionpaper, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg 85, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.

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