After I started living alone, many people recommended that I get a microwave oven. That, I was told, would make it easy for me to prepare a meal for myself, and save me a lot of time. So, earlier this year, during the post-Christmas sales, I bought one. Ever since I have been wondering how to figure out what it does for me--how to do a cost-benefit analysis.
The timesaving business is very tricky. For example, a frozen chicken potpie would require 60 minutes to thaw and heat in a conventional oven but can be fixed up in 12 minutes in the microwave. There's a saving of 48 minutes. But the saving is for my kitchen appliances, not for me. If I use the conventional oven, I am not going to spend 60 minutes of my time over it--standing next to the oven and waiting for it to finish its job. I might spend a few minutes--say five--putting the potpie in the oven. Then, while waiting for the cooking to finish, I have 55 minutes for myself--to read the paper, write the Great American Novel, or do whatever it is I do with my time.
Paradoxically, the timesaving is more real the smaller the amount of time to be saved. For example, it takes 12 minutes to heat a frozen pizza in the conventional oven and only four minutes to do it in the microwave. The eight extra minutes that I spend waiting for the conventional oven to finish are too few for me to use outside the kitchen. If I use the conventional method, I am likely to spend eight more minutes in the kitchen than if I use the microwave. So, by using the microwave, I gain eight minutes outside the kitchen.
What is the value to me of those eight minutes? I suppose the conventional answer is to divide my annual earned income by the number of minutes I spend working and so arrive at the income I could gain by having another minute at my disposal. In my case this would be a difficult calculation. The time I spend "working" is not only the time I spend sitting at my word processor and writing these essays. It also includes all the time I spend musing about these essays, while in the shower, or on the bus, or trying to fall asleep, and I have no idea how much time that is in a year. Anyway, the eight minutes I don't spend in the kitchen will probably not be used to earn more income. It will probably be used to lie down listening to music.
On the other hand, the eight minutes I would have had to spend in the kitchen if I didn't have a microwave need not have been entirely valueless. I could have listened to music, or simply mused--about an essay like this one or about something else. The basic fact is that at my advanced age, the best use of time is staying alive. Still, the time spent outside the kitchen is probably more valuable than the time spent in the kitchen.
Thus, one benefit of the microwave is the excess of the value of the time spent outside the kitchen over the value of the time spent in the kitchen. If I bake two pizzas a week and "save" eight minutes per pizza, that adds up to an excess value of almost 14 hours a year spent outside the kitchen.
There is, for me at least, another benefit. That is the pleasure of owning, operating, and observing a high-tech instrument. That pleasure is independent of any service delivered; it is the pure enjoyment of the miracle of technology. I first observed this with television. It fascinated me, like it did many others of my generation, even though almost everything we saw on it was terrible. We were fascinated by the fact that it worked at all. To a large extent, the Internet is like that. We enjoy surfing the Net just because it is so amazing, not because what we learn on it is so valuable. There is some of the same satisfaction in watching a microwave at work.
What is the cost of acquiring these benefits? My microwave cost $150. If it lasts for 10 years, and the interest I could earn on my money is 5 percent, when I bought it I was facing a cost of about $19 a year. But once I have bought the microwave, the cost of keeping it is much less. One of the basic lessons of economics is "Bygones are forever bygones." What I paid for it is a bygone. Now the cost of keeping it depends on what I could sell it for. The nuisance of trying to sell it would probably make that not worth my while. The best alternative would be to give it to some charitable organization, such as the Salvation Army. Suppose I give it to them and can take a charitable deduction of $100. That might reduce my taxes by around $50. The cost of keeping my microwave rather than giving it away is the sacrifice of about $6.50 a year plus the sacrifice of the good feeling of having performed a charitable act. (This costs me $6.50 a year rather than $5 because by not giving away the microwave I am foregoing not only the $50 but also the interest I would have earned on the $50 for 10 years.)
T hen, as this calculation might be summarized in the microeconomics textbook:
Value per hour of time spent outside the kitchen: X.
Value per hour of time spent in the kitchen: Y.
Value of the satisfaction of having given a $100 gift to charity: Z.
Annual value of the satisfaction of owning and operating this amazing instrument: W.
Monetary cost of keeping the microwave for a year: $6.50.
Number of hours per year of release from the kitchen as a result of using the microwave: 14.
The question is whether X minus Y times 14 plus W exceeds $6.50 plus Z. Of course, I can't answer this question, because I can't measure W, X, Y, or Z in dollars or any other quantity that is common to them all.
(I leave out the further complication of the cost of electricity for the microwave compared with the cost of gas for the oven. I live in an apartment building where most of these costs are borne by about 200 other families, just as I share in their costs. That is what economists call an "externality.")
Nevertheless, despite all these imponderables, I do make a decision. I decide to keep and use the microwave. In the end, if you ask me why I bought a microwave, why I keep it and why I use it, I can't give a better answer than "I like it."
This is, of course, an exceedingly trivial case of decision-making. But much of life is like that--personal life, business life, government life. Perhaps it is most like that in government. We cannot compare the incomparables and weigh the imponderables. We do what we like, and when we stop liking it, we change.
As an economist I am bound to insist that economics has its value. There are cases, especially in business, where costs and benefits can be measured in the same units--dollars--and directly compared. Even where that is not true, the differences between costs and benefits may be so large that fine calculations are unnecessary. Anyway, the habit of trying to compare costs and benefits is useful, if one does not insist on trying to apply it where it doesn't work. After all, it was an economist (J.M. Clark) who warned against an irrational passion for dispassionate rationality.