What economists like to think of is what is the opportunity cost of whatever decision you make. By that I mean, what is the next best thing you could do with that time or money? If the next best thing I can do gives me more satisfaction or more happiness for the same amount of money or time, then I should shift my behavior. All of us tried to shift our behaviors in a way that for one hour of your time or a dollar of your money, you get the biggest bang, the biggest satisfaction. We ask people, when they choosing certain behaviors, what is the opportunity cost of that? Very often you will say, I wish I hadn't wasted my time doing that. I could have done that. That was your opportunity cost, but unfortunately, you did not have the information, the wherewithal to realize you were better off doing your homework than wasting your time in front of TV. That was your opportunity cost of time. If you had a homework piled up and you were watching TV, your opportunity, but you had weighed your costs and benefits, hopefully made the right decision that you prefer that leisure time over working. Whatever it is, it's your next best thing you could have done with your time or money. You need to weigh that costs and benefits when you're thinking, what should you give? How should you be generous? How should you do good? Remember, there's a trade-off. You must analyze what are you gaining, maybe the warm glow, the fact that you're fulfilling a duty of doing good, or giving up tithing, giving up some amount of money for the welfare of others. Often, if you look at it from an organizational perspective, so I'm the non-profit and you come to volunteer and you are a lawyer and you come to serve soup at my kitchen. I, as a non-profit, think to myself, it's very nice you came to serve food at the food kitchen. But wouldn't I as a non-profit be better off if you did, you're lawyering for one more hour, made $150 or $500, whatever your charges are, gave me the money and I could hire people at minimum wage, maybe $20 an hour, and I get to gift five hours of somebody, or 10 hours of somebody, rather than you having to come and give your time. Also, if the lawyer's completely interested in only feeding the hungry, then he or she should do exactly what I'm suggesting. She should work an extra hour of the office, earn the money and then give it to me as a non-profit manager so I could hire more people and feed more people. But you'll see soon that's not what people do. People like to do the volunteering because remember there is a warm glow of giving the money, but there's also warm glow for volunteering. Does the opportunity cost of giving the money or an hour of your time? Different people have different opportunity costs. I can't compare your opportunity costs with mine. Yeah, unless you want to just do it on a monetary level and say, okay, you're a professor, you are a CEO of a large corporation. You're making hundreds and thousands of dollars and I'm not. Who's opportunity cost is higher if I give up an hour or if you give up an hour? They want you to think about the costs of purchasing any item, in terms of money and the relatedness of time and money. Most of us don't think about it. When I go out to buy something, I'm not thinking like this. I'm thinking like this with you. But clearly, I'm not making these decisions every time I go to purchase something because I don't think I would end up buying anything. But nevertheless, I'm going to give you an example. Let's say you make $25 an hour. You figure that after you pay taxes and for social security and the health insurance they take off from your paycheck and all of the other benefits you might have had and then they deduct from you pay. Let's say you bring home only $18 out of the $25. Now you go shopping, and suddenly you see a dress that's about a $117 worth. Guess how many hours you have to work for that dress. If you do your calculations very simple, you brought home $18 an hour and your dress is $117, you have to work 6.5 hours to earn the dress. When you put it like that, that might be a good analysis to give them. But think about it for your next purchase. This is the relatedness between time and money. That filters through not just when you're purchasing things for yourself, but also when you're being generous. Now, when you look at generosity and try to decide what to give your time or your money, you want to do good and feel good, you ask yourself the questions. Does giving time make you feel good? Does giving money make you feel good? Do you get a bigger more long-term warm glow in when you give money or when you give time? I can't answer that for you, you have to think that through for yourself. Which one gives you more warm glow? Which one makes you feel better about yourself? Because you remember that lot of the times we gave was because we felt good about it and you had the signs about, feel good when you do good, etc. Which one makes you feel more good? Without making these trade-offs, without thinking through how much of my hour or how much of my time, how much of my money and doing that accounting, we know intuitively in our gut feeling which makes us feel good and we gravitate towards that. We know the trade-offs. We don't have to write them on a pencil and paper and make it counts in ledgers and decide what to give each month, we just know it because we are constantly feeling good about what we do and we know that somethings make us feel better than some others things. Of course, because we seek pleasure over pain, that is our modus operandi, we will gravitate to generosity x that make us feel better than other x. Something that makes me feel good more will make you feel less though, so you can't compare that over people and therefore I can't tell me what to do. You have to decide what you do. If the question is, should I donate time or money? The answer is both. Give when and what you feel at the time, because charitable organizations rely both on time and money to do their work. They rely on financial gifts from donors and also volunteers. But for you it comes down to your own personal preference. If you find yourself short on time but with the extra money, charitable giving might be the right answer for you. If your money is tight and you still want to give back and do good, then volunteering is your answer. Do you agree? Is that how you make your decisions? I think I make mine that way. That is what I'm ready to share with you that it's a personal preference. Can you substitute volunteering for a monetary donation? That's a larger question. Economists always wonder, are these just substitute goods like if people volunteer, they don't give money or if they give money, they don't volunteer. Are they substitutes or are they complementary goods? Let me just explain what I mean by substitutes. I mean coffee and tea are generally considered substitutes. You're either a tea drinkers like I'm or a coffee drinker. These are considered substitutes. But, there are some goods that are considered complements. Tea and sugar that you might put in your tea are considered compliments because when you drink tea, you also need sugar to sweeten your tea. If you have one, you're likely to have the other but if you don't have to have the other, some of us drink tea without sugar, but some of us can't stand tea without sugar. These are considered complements, whereas tea and coffee are substitutes. I'm asking you, do you think volunteering and monetary donations are complements that they go together, or there is one substitute for the other? That could be your own individual answer. For you, is volunteering a substitute for making a money donation, or is making a donation complementary to your volunteering? What do you think? Yes, I know you're thinking, "Well, it depends. " But many of our answers are, it depends. Often, volunteering and charitable donations go hand in hand. Because they find that when you volunteer at an organization, there's lots of research that shows the volunteers donate to their organizations as well. That way it's a complementary good. It's also a substitute in the sense that many of us feel very tight for time, but we have extra money and we give it away and then we don't feel so bad that I didn't go out to help at the bake sale in my child's school, but I donated money in savings because I just didn't have time to do it. In sometimes it works as a substitute, but we often find that people do both. These things are the "depends". But some research shows that most subjects prefer in terms of one glowed, the volunteering over donation. You can understand that because when you are directly face with the impact of what you're doing, you really feel the impact of what you're doing. Remember, the impact of your donation, of your generosity matters to you. If you're there, right there, and you can see that you're doing some good, and you get a bigger one glow than if you just donated money because you run a check, or you went online, and you paid for a charitable donation. That event took maybe at the most five minutes of your time versus you went an hour and volunteer it. The warm glow may have lasted longer, may have lasted for the entire time you volunteered at least a big chunk of that, and even when you went home. Writing the check, yes, there was a warm glow and maybe it lasted a little bit shorter. I don't know the answer. It really depends on you, how you feel about either if you get. At different times in your life, you might do one more than the other for reasons we just discussed. The research shows us that volunteers, people who volunteer donate to charitable organizations at twice the rate of people who don't volunteer, and that nearly 80 percent of volunteers donated to charity compared to 40 percent of non-volunteers. There is a bit of both going on in society. Do you do both, or do you do one of these? The answers, I suspect and I don't hear your answers, I go and tell you thinking, but I suspect you're doing both. An interesting thing when economists think about time and money as been substitutes, is that Congress if you recall, passed a law in 1917 they granted favorite tax treatment to charitable contributions, but they haven't yet done so for volunteer contributions. In other words, I can't wait off the time I donated, but I can write out for money I donated. If I go to a hospital and donate 20 hours of my time a week, I don't get any favorable tax benefits. Maybe I can write off the expenses, but I can't write off my time. Whereas, if I donated the equivalent amount of money if I would work those 20 hours and donated money, I would get a tax write-off. Our governments in most countries treat the donations of time and money very differently.