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Household tasks — time is money

Sarah Kalliney doesn't have time to do her laundry, visit her parents or change the cat's litter box. She eats out six nights a week, uses a personal shopper and gets her groceries delivered to her doorstep.

But the time-starved Manhattan executive, who bills at roughly $200 an hour, recently spent nearly 10 hours battling her cell-phone company, Sprint PCS, over $9 in late fees.

Is it possible that was worth her time? It is a question economists are finally beginning to tackle. After decades of using time-value formulas to help companies maximize productivity, researchers and even the U.S. government are looking at how those concepts apply to the home front.

In an economy of convenience, where time can be purchased in everything from bags of prewashed lettuce to dog-walking services, these studies aim to help answer dozens of questions Americans wrestle with daily: Who can afford a baby-sitter? A lawn service? A personal shopper? "The household is a little firm," says Daniel Hamermesh, an economics professor the University of Texas. "It employs labor, it buys technology, it makes decisions about what services to outsource."

But it is a firm that could use some management consultants. Americans often make drastic miscalculations about the value of their time, taking a do-it-yourself approach to tasks that might be less costly in time and money to hire out. A simple oil change, for example, costs $24.99 at some Jiffy Lube locations. But the supplies to do it yourself can run about $21. Yet about 43 million U.S. residents say they change their own oil.

In the past, economists looked strictly at your income to put a price on your leisure hours. Now, the study of off-the-clock time — or "household production," as it is formally known — is getting a fresh look, even beginning to take into account intangible factors such as satisfaction and pleasure.

In January, the Bureau of Labor Statistics launched its first study of household time use in an effort to provide reliable data for the emerging field. The monthly survey will ask people to report how much time they spend doing such things as practicing yoga and dropping off their kids.

A flood of academic papers, such as "Taking Household Production Seriously" and "Time Crunch or Yuppie Kvetch?" are also circulating. Other work has looked at the impact of time-saving technology from microwaves to washing machines.

This body of scholarship is gaining new relevance now that pinched budgets are forcing some to work longer hours, putting a higher premium on cost-effective use of free time.

Economists say one of the most common miscalculations is "outsourcing" child-care needs to free both parents to contribute to the household income. While plenty of parents choose to stay in the labor force because they enjoy their jobs, others stay because they think they can't afford not to.

Sometimes the math proves otherwise, as Steve and Jan Lira recently discovered. She works three days a week as a tax analyst, bringing their combined income to more than $120,000 a year.

They recently looked at what her job was actually costing them — from the $18,500 they will spend on day care to the $14,000 they lose in tax credits. By the time they threw in her work-associated costs (office parking, dry cleaning, the restaurant meals they were consuming because they were both too exhausted to cook), they determined that if she left her job, the couple would lose only a few hundred dollars a month.

But economists recognize that for many families the numbers are just a starting point. You can temper the equations with what economists call "psychic variables." Some divide household activities into two categories: consumption (things you enjoy) and production (anything that feels like work). Love gardening? It is consumption. Hate gardening? That is production — increasing the argument in favor of hiring someone else to do it.

"It's not just about the money," says Hamermesh. "I get pleasure from listening to the symphony, other people get pleasure from harassing the airlines."

That is how Sarah Kalliney justifies her epic battle with Sprint: It was worth it for the satisfaction. "These people are jerks, and they're taking money that's not theirs," says Kalliney. "If they're going to ruin my day, I'm going to ruin theirs." She finally won — but only after she tracked down the phone number for the president of the company. Sprint PCS says it has since taken steps to improve its customer service.

The traditional approach, which valued leisure time based on your after-tax hourly wage, was published by Nobel-prize winning economist Gary Becker in 1965. The idea was that any time that went toward leisure could be reinvested in work.

But income-based formulas have obvious limitations. For instance, many people on a fixed salary don't have the option of getting extra pay if they work another hour. In addition, some people's work is keeping a house running, which doesn't come with a salary.

Still, in figuring out how to maximize your time, salary is a logical jumping-off point. Economists suggest you begin by calculating what an hour of your time is worth, based on your salary after taxes. Using that figure, you can then compare the cost of doing the job yourself vs. outsourcing it. If you do it yourself, you have to add in the price of any materials; if you hire someone else, of course, you have to factor in the time it takes to hire and manage them.

Then, you are ready to tackle the other half of the calculation, which looks at the nonfinancial costs and benefits. Among the factors to consider: how much you enjoy doing the job yourself, and what you're giving up. All told, these conclusions will steer you in one direction or the other.

To see how this formula works in the real world, we outsourced tasks from lawnmowing to our tax returns — and then redid the jobs ourselves to compare. Buying a jar of prechopped garlic, for example, saved us 22 minutes of slicing and dicing. According to the formula, anybody who makes more than $10,000 a year can technically afford it. Emotional downside: fresh garlic tastes better.

Investing in technology — even a good garlic press — can change the dynamics of these calculations. That is what we found when we did our taxes. Visiting a walk-in tax preparer was a mere two minutes faster than the software program we used, factoring in our travel time to his office, but he cost $139 more. Under this particular scenario, you would need to make almost $14 million a year to justify hiring someone.

Then there was our messy desk. A $85-an-hour professional organizer whipped half of it into shape. The other half we tackled ourselves. The threshold income for hiring the pro? More than half-a-million dollars — partly because we had to hang around to help her navigate our piles of papers. But she did throw in a feng shui analysis of our bedroom.

Many hard-core do-it-yourselfers are grappling with these same variables. Mark Berg, a financial planner in Wheaton, Ill., changes his own oil and once rented a 70-pound jackhammer to rip out his concrete basement floor.

But the garage sale he held last summer challenged his view. After hours of planning and a long day in the June sun, he netted a nasty sunburn and a wage of $3.56 an hour — somewhat short of the $150 an hour he charges at the office.

"We will never do another garage sale," he says.