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TiVo Really Is Economical - TiVo Lovers
For owners and fans of TiVo
TiVo Really Is Economical
There was a fun article in Wednesday's New York Times, in the Freakonomics Blog - TiVo Economics. In it economist Justin Wolfers looks at TiVo (and by extension, DVRs in general) from an economic standpoint. The value of the time saved skipping ads, the value of improved entertainment from selective content, etc, and shows that in the end TiVo makes sense, and cents. This captures the crux of the article:
Average hourly earnings are around $18, suggesting that TiVo saves time that could otherwise have been sold for around $108 per week. We should also add in the benefit of higher quality television — around $11 per week — and subtract the cost of the annoying service charge, which is around $3 per week, yielding net benefits of $116 per week, or $6,000 per year. The net present value of this flow is around $120,000 per person, or perhaps around a quarter of a million dollars per household. Wow.
The value would be even higher over time with a lifetime subscription instead of monthly I'd think - though I'm no economist. It is a light-hearted piece, but he is making a serious point about the value of time and entertainment, and how TiVo can maximize that value for you. Read the full article for a break down of his math and the assumptions he bases it on.

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dsrtao From: dsrtao Date: November 27th, 2008 03:09 pm (UTC) (Permalink)
He makes the standard economist mistake, though: he takes an hour of leisure-time activity and arbitrarily sets its value equal to that of another hour of paid work.

For some people, this is semi-reasonable: at the end of a work day, would you take another hour of work at the same wages? On many days, many people would say yes. But a reduced number would take a second extra hour, and fewer still would sign up for a third extra hour.

Most people don't have that option: hours are not under their control, insofar as a manager assigns them and they are capped at 40 hours per week anyway -- any more than that and they would be paid at overtime rates, which businesses are loathe to do. Exempt workers -- including, perhaps, a substantial fraction of TiVo owners -- don't have the option of getting paid more for an extra hour of work.

Now -- can a TiVo or other competent DVR increase the value of TV time? Certainly. Is it to the extent calculated in the column? No.
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