# Stated vs. Revealed Preferences

> Compare what you say matters with where your time and money actually go.

Chapter V, Learning and growth · 5.07 · Origin: Paul Samuelson (1938) · Time: 20 to 30 min · Solo

**Use it when** what you say matters and where your time goes don't match.

Interactive workspace: https://kogu.tools/tools/revealed-preferences

## Abstract

Economists separate stated preferences, which are what people say they want, from revealed preferences, which are what their choices show. Paul Samuelson built revealed preference theory on the idea that behaviour is better evidence than words.

Applied to your own life, the comparison can sting. Rank what you say matters most, then look at last week's calendar or bank statement. Where the two orders disagree, you can change what you do, or accept that your priorities are different from the ones you'd write down.

## Method

1. **Rank what you say matters.** List the parts of your life you care about, most important first.
2. **Measure where it went.** Use real records from a recent week, like hours in your calendar or what you spent.
3. **Compare the two orders.** Look for priorities that get much less, or much more, than their rank suggests.
4. **Decide on each gap.** For each one, either change the behaviour or accept that the preference is real.
5. **Check again.** Do it again in a month and see if anything has moved.

## When to use it

- You're busy all the time but suspect your hours aren't going where you want.
- You keep saying something matters and never get round to it.
- You're setting goals and want to start from what actually happens in a week.

## Common pitfalls

- Working from memory. People remember spending more time on their stated priorities than they did.
- Treating every gap as a failure. Some show a preference worth keeping, like rest.
- Forgetting that some things matter a lot but take little time, like a weekly call with a parent.
- Drawing conclusions from one unusual week. Use a typical week, or a few.

## References

- Samuelson, P. A. (1938). A note on the pure theory of consumer's behaviour. Economica, 5(17), 61 to 71.
- Samuelson, P. A. (1948). Consumption theory in terms of revealed preference. Economica, 15(60), 243 to 253.
- Vanderkam, L. (2010). 168 Hours: You Have More Time Than You Think. Portfolio.