Valuing Changes in Time Use in Low- and Middle-Income Countries

Area of Science:

• Development Economics
• Applied Microeconomics

Background:

• Accurate valuation of time is essential for economic analyses of development projects.
• Existing literature on the monetary value of time in low- and middle-income countries (LMICs) is reviewed.

Purpose of the Study:

• To provide recommendations for estimating the value of time in benefit-cost analyses within LMICs.
• To support analysts in selecting appropriate methods for valuing time savings.

Main Methods:

• Literature review of monetary value of time studies in LMICs.
• Identification and discussion of methods for estimating the value of time, including benefits transfer and stated preference approaches.

Main Results:

• The study finds support for using a benchmark of 50% of after-tax wages for valuing time in informal sector activities.
• Recommendations are provided for practical application in benefit-cost analyses.

Conclusions:

• The benchmark of 50% of after-tax wages is a viable option for informal sector time valuation in LMICs.
• Analysts should consider benefits transfer or stated preference methods when project outcomes are sensitive to time value assumptions.