Searching for the Opportunity Cost of an Individual's Time

Abstract. A traditional assumption made in the literature is that the value of an individual's time spent in any activity is equal to his or her wage rate. This result stems from the derivation of the value of leisure time in the context of the standard labor supply model. This paper presents some reasons why the relationship between the wage rate and the value of time does not hold. Suggestions for what to do when the relationship breaks down and the investigator needs some value to impute to the individual are given in the final section of the paper.