For some reason, driving to Tauranga seems to be fairly inspirational for my blog of late (see here). This week, while driving to Tauranga, I noted that Google Maps was recommending that the fastest route to my destination was to take the Takitimu Drive toll road. It would save four minutes. But wait! It would cost me a toll of $2.10. Is it worth it to pay $2.10 in order to save four minutes?
There is a trade-off here - time vs. money. I should have taken the toll road if the value of the time savings was at least as great as the monetary cost of $2.10. How high does the value of my time have to be in order for the time to be more valuable than that? If four minutes were worth exactly $2.10, then that implies a per-hour value of time of $31.50 ($2.10/4*60). If the value of my time is more than that (which it likely is, based on the hourly rate I get paid in my day job and a 40-hour workweek), then I should have taken the toll road.
I didn't take the toll road. Was I being irrational? First, it turns out that my regular route didn't have as much traffic as Google Maps thought, so it's unlikely that there were four minutes of savings to be had by taking the toll road (I had guessed as much, which is why I didn't go that way). Second, paying the toll requires me to actually remember. If a driver forgets to pay their toll (which is pretty normal for me), then Waka Kotahi sends them a demand for payment of $7.50. If the cost of the toll road was $7.50 instead of $2.10, then my time would have to be worth at least $112.50 ($7.50/4*60) per hour for the toll road to be worthwhile. That's far more than the pay rate in my day job. Taking into account my regular failure to pay the toll immediately, I probably made the right decision.
However, coming back to the point of this post, is Google Maps aware of the trade-offs in its route suggestions? Saving four minutes at a cost of $2.10 would have been a good deal for me, but not for someone who earns the minimum wage ($22.70 per hour, before tax). When the trade-off is minutes for minutes, it is a simple matter of choosing the shortest route. But when the trade-off involves an actual monetary cost, we should probably be careful about what Google Maps is recommending.
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Allow me two observations:
ReplyDelete- should not one consider the after tax marginal income from work?
- is the average hourly wage a good measure of the marginal income from work, for example, for a university professor paid a fixed monthly salary in exchange for a number of tasks (as opposed, say, to a lawyer billing by the hour)? Should not one consider the income equivalent of the next best occupation of time?