Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Thursday, August 25, 2005

The Opportunity Costs of Time;
choosing the optimal travel mode

If you were taking your Harley to a motorcycle rally, you would ride it there, right? Not if doing so would take you a day or two and you have a high value for your time. Phil Miller has this piece about a tax attorney in New York City who shipped his motorcycle to Sturgis, South Dakota, and flew there himself.

Time spent riding the 1726.88 miles from New York City to Sturgis (and back!) is time not spent doing something else. And while the enjoyment of travelling by bike is certainly there, sometimes that time spent doing something else is much more valuable. So the biker goes against tradition and has his/her hog shipped in separately. The average motorcyclist, according to one study presented by the New York Times, had a much higher income in 2003 than 1998:

Riding is becoming more of an investment than a hobby. According to The New York Times, the average motorcycle owner earned $44,000 a year in 1998; by 2003, the figure had risen by 28 percent to $56,000.

I imagine those figures are not adjusted for inflation. In any case, traditionalists scoff at the notion:
"Some of them make a big deal about, 'I rode my bike to Sturgis, and these wussies had their bikes shipped,' " he says. "I don't want to spend six days on the highways. That's boring."

Instead, he would rather spend his riding time travelling around the Rocky Mountains.

This is a terrific example of the opportunity costs of time and how people respond to incentives.
Who Links Here