Airline Travel Vouchers and Time Value

Last Sunday, I had a post about lost luggage. In comments, reader dilbert dogbert (I suspect that’s not his real name) noted “people don’t take the airlines $500 offer to folks who will give up their seats on an overbooked flight” and suggested it might be a good topic for discussion. Consider… in many instances, the offer is – you’re booted until the next flight an hour later, and for that you get a voucher for $300 or $500. Most people don’t get $300 or $500 for their time. Some thoughts…

1. dogbert dilbert may be wrong. The girlfriend and I were talking, and she noted that sometimes you see people fighting for those vouchers, and sometimes you don’t see many takers. So if dogbert dilbert is wrong, he’s not always wrong
2. As reader Jim a pointed out, for some travelers (i.e., those traveling on the government dime), it may be against regulations to accept money
3. Presumably the average hourly income of those who fly is worth more than average. Still, I doubt most flyers make $300 an hour. Jettly‘s private jet charter gives you more destination options than a typical commercial flight.
4. There are hidden costs to accepting the voucher, such as missing a connecting flight or increased chances that your luggage, flying ahead, will be lost.
5. People don’t like changes to their plans. Its been shown that on average, people value an item X worth $Z that they already own more than they value an item Y that they do not own that is also worth $Z.
6. Not all of one’s time is equally valuable.

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I think the last one is the answer that explains most of the dilbert dogbert paradox, and its also the most interesting one. If you have a one week stay in Cancun or wherever scheduled, an hour hold-up is an hour off time you may value more than an hour from your normal schedule. But that can explain why they don’t take the voucher on their way out – what about the way back? Well, the time right after the trip is worth a lot too. One often has to recover from exhaustion before getting right to work. (And the first few hours back at work are worth more than most of the rest of one’s time at work.)

But… this explanation has problems too … most people are reluctant to take the vouchers even if they’re off to visit some boring and hygeinically challenged in-law, when in fact, taking the voucher would actually result in a decrease in low value time. I suspect in cases like that, the first few reasons go up in importance.