In 1986, when I was at the London School of Economics developing the economic theory underlying Time Banking, my mentors challenged me to explain how people would choose to devote their time helping others if they could be earning money or enjoying leisure. True, people volunteer for no compensation – but that is not what I was proposing. Time Banks involve compensation – but it is not compensation in money or in a barter currency with a monetary equivalent. Indeed, had these credits been convertible to an explicit monetary value, the Internal Revenue Service would have stepped in and declared them to be taxable income. Subjecting every good deed to taxation was not what I had in mind.
Indeed, I had created a kind of hybrid that combined barter and volunteering. Engaging in Time Banking meant a commitment to accept time credits earned by others on a one-for-one basis. Someone who had earned credits providing highly skilled tasks would accept as full payment credits earned by someone performing some minimum wage task. My mentors scoffed: Maybe one would willingly accept a bad deal like that once or twice – but who would keep accepting bad deals, time after time?
As it turns out, lots of people. According to a New York Times article (“Where All Work is Created Equal,” Sept. 15, 2011), there are more than three hundred Time Banks in twenty-three countries. The largest one in New York City is the Visiting Nurse Service TimeBank with some three thousand members. Recognizing its success, Mayor Bloomberg’s Department of Aging has established Time Bank programs for seniors in all five boroughs. The goal is for members to provide the kind of informal support that promotes health and prevents unnecessary utilization of the emergency room by elders.
Another thriving Time Bank is operated by Neighborhood Health Centers of Lehigh Valley, Pennsylvania, where, for ten years, home visits by Time Bank members, functioning as health coaches and an informal support network, have helped people with chronic problems stay healthy and at home—reducing their impact on Medicare and Medicaid programs. They utilize the open source software system, Community Weaver, developed by TimeBanks USA. It creates a new kind of commons by providing an inventory of the vast underutilized capacity of all TimeBank members–so that members can know who offers what kind of services. In 2012, the National Science Foundation gave a grant of nearly one million dollars to Penn State University to create a mobile app for Community Weaver. A TimeBank app might well be on smartphones everywhere by 2014 — or before!
Economists have another way of predicting how long one will continue to provide a given service. They say that additional units of anything will be produced so long as the marginal benefit of doing so exceeds the marginal cost. If survival of the fittest applied in economics as well as nature, it did not sound like my currency had much of a chance of surviving very long. If all hours were of equal value, I had to prove that people would make a commitment to helping others in return for accepting something of less value. And I had to prove that they would keep doing so longer than if they volunteered and received nothing in return.
How could that possibly work? My dilemma was resolved when I learned that economists acknowledged the distinction between intrinsic reward and extrinsic reward. In 1970, Maslow had articulated a hierarchical structure of needs from lowest to highest. Among the highest human needs are belongingness, self-esteem and self-actualization – the need to reach one’s fullest potential. If earning time credits enhanced one’s sense of self, of belongingness, or provided a means of self-realization, then the marginal benefit of earning time credits could readily exceed marginal costs. If it reinforced the satisfaction one got from volunteering, it might reduce burn-out, attrition, or turnover for volunteers.
Intrinsic rewards are those in which the activity itself is the reward. Extrinsic rewards are those that follow as a consequence of doing something. In effect, Time Banking reverses money’s relationship between intrinsic and extrinsic value. At the core of money is extrinsic value: what you can buy with it. The subjective value, the sense of personal self-worth, is important, but secondary and subjective. At the core of Time Banking is intrinsic value, the sense that one matters, that one has the power to make a difference in the world, that one’s worth has somehow been validated. What one can “buy” with time credits is highly speculative and uncertain. So the intrinsic value is core.
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