The time dollar theorem
Why no one will use time dollars
A recent episode of Freakonomics Radio, the pop economics podcast, was about time banking. The idea is that one hour of someone’s labor is always worth one time dollar. So, for example, you can mow someone’s lawn for an hour, receive one time dollar, and use that time dollar to pay the babysitter to watch your kid for an hour.
I would have expected the outline of the episode to be:
Here’s an interesting thought experiment
Here’s why it doesn’t work
But instead, the host Stephen Dubner and his guest Andrew Yang were advocating for actually doing this. I humbly present the following theorem:
Theorem: If there is an existing cash market for a service, then no one will offer that service for time dollars.
Proof: Consider the person offering the most valuable service for time dollars. They are only able to exchange their service for less valuable services. They will therefore return to cash. Repeat the argument for the next most valuable service, and so forth. Eventually everyone will return to cash.
So if time banking is going to work, it has to be for services without existing markets. But it’s hard to think of useful things in the service of others that people don’t already trade for cash.