Work Martyrs and Mental Accounting: The Mystery of Lost Vacation Time

I just learned, thanks to an excellent Washington Post article, “Are You a Work Martyr?”, that every year we fail to use 658 million days of vacation time. The consequences reverberate through the economy, according to Post economics columnist Robert Samuelson. According to the article, 90% of full-time U.S workers receive some form of paid leave (a combination of vacation, personal-family-sick leave, and holidays). Travel-industry group Project: Time Off (PTO) concluded that U.S. workers used only 16 of 22 days they had available in 2015. Nationwide, those six unused days per worker totaled 658 million unused days of paid leave. PTO said that 222 million of those unused days couldn’t be rolled over, paid out, or banked, costing workers $61.4 billion in forfeited benefits.

Samuelson pointed out several potential reasons we do this: fear of returning to a mountain of work, a belief no one else can do the job, a decision that we can’t afford to pay for a vacation, wanting to show complete dedication to work, not wanting to be seen as replaceable, and feeling guilty about using the time. The connectivity of the modern workplace also contributes; instead of spending our vacation obsessively checking our email, we just keep working.

These are all great points, and we should add to the discussion how our mental accounting system encourages us to not value all that lost time as lost money: we don’t think of those 658 million days as free labor or an uncashed paycheck, even though that’s exactly what they are. I believe the phenomenon stems, in part, because vacation days aren’t considered the same way as straight salary in compensation but rather as a perk or part of the social credit market.

To understand, consider this hypothetical offered by Dan Ariely: If a friend asks you to pick them up because they are stranded with a flat tire, you’d say sure. If the same person called and said, “Could you pick me up? I’ll pay you three dollars,” you’d be insulted. That, of course, doesn’t make a lot of sense on the surface since three dollars is more than free. But if you consider that in the “free” case the transaction is one of social currency, it makes more sense. When money isn’t into the hypothetical, you simply do it “as a friend” and bank the gesture in the social credit accounting system. While you could figure the cost of calling an Uber to pick up your friend, you don’t; you’re doing a friend a favor and, whatever its value, you trust you’ll get something equivalent in the long run. Once your friend offers you three dollars, the friend has moved the transaction from the social market to a monetary market where valuing your time at three dollars is insulting.

Here is another great example from Ariely: If you invite me to dinner and I bring a thirty-dollar bottle of wine, you probably think, “what a nice gesture.” If I instead tucked thirty dollars under my plate, you’d think I was being a huge jerk. In fact, if I merely leave the price tag on that bottle of wine, you’d start thinking that I’m attaching a monetary value to your hospitality (itself a problem), and the value for several hours of your food and company doesn’t amount to much more than minimum wage. Again, the closer we get to the monetary market, the more likely we are to use that accounting system (instead of social currency).

I imagine that we mentally account for our vacation time in the social currency ledger, like it is a friendly or gratuitous gesture by our employer – and not like it is six days of pay we are simply giving away. That fits with some of the reasons Samuelson describes in the Post article: we are (probably unconsciously or naively) thinking that the boss will appreciate our work ethic and commitment.

There are ways to improve our mental accounting. Imagine if you were given money representing your vacation days up front and you had to pay your employer back for the vacation days you didn’t take. Those vacation days are part of your compensation so that’s actually what you’re doing. You’d take those days off instead of giving back the money.

Alternately, imagine you said to your employer, “I didn’t take those six vacation days last year and I don’t want to take them this year. You’re paying me about $200 a day so I’ll instead take the $1,200 for working those six additional days this year.” If your employer said no, that would encourage you to take that time off as it would move the accounting of the days into the proper place, out of the social ledger. In both hypothetical situations, if you treat the vacation time like cash – which it is, because it is part of your compensation – you account for it properly.

Literally and figuratively, you owe it to yourself to treat your vacation time the way you treat your money. If you do that, you’ll be doing a favor for the folks at places like Disneyland, Universal Studios, and Reptileville across a grateful nation. You may also earn the appreciation of your family (unless you leave the receipts lying around in plain sight).