There are also some conceptual issues with Costa’s explanation. Costa presupposes that there are decreasing marginal benefits to added increments of free time, such that when time is scarce, its value is relatively high, while when it is abundant, its value is relatively low. But free time is not just another scarce economic resource. It rather has the peculiar characteristic that its marginal value very often increases as more of it becomes available. This is because many activities become more fulfilling with the acquisition of skill and experience, both of which take time. For example, the satisfaction of the ten thousandth hour spent playing a musical instrument is quite probably substantially higher than that of the tenth hour. Since many activities have this feature of increasing returns to time invested in them (as skills become perfected, friendships deepened, tastes refined, and so on), it would be wrong to assume that the value of free time necessarily declines at the margin. Furthermore, diferent kinds of activity take diferent amounts of time, so with more free time, the range of things that can be done with that time increases. The addition of the nth hour of free time might make it possible to engage in an entirely new kind of activity and so be of more value than the addition of the previous hour, which allowed only for more of the same. So while the theory of declining marginal returns makes some sense in relation to income, considered in terms of the set of goods and services aforded by a given amount of money, it is much less clear how it applies to time. Since goods and services can only be made use of in time, as income increases, the degree to which added income can actually be used to produce added utility becomes increasingly constrained by limited free time. But in what sense can the same logic be applied to time itself? It is not apparent why people should reach satiation when it comes to free time. Having time is a condition on doing anything, and there will always be a far greater number of desirable activities that could be undertaken in a given lifetime than can be undertaken—and many of those activities would require minimal funds. It seems clear, therefore, that the benefits conferred by added increments of free time do not necessarily decline at the margin.
Empirical Pattern in the United States
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