Accounting for cognitive time in activity-based costing: A technology for the management of digital economy

Natallia Pashkevich, Fabian von Schéele and Darek M. Haftor

Technological Forecasting and Social Change, 2023, vol. 186, issue PB

Abstract: Human cognitive time has become a key asset of the digital economy, yet we lack the means to manage it. In response to that need, we propose a technology to manage cognitive time in economic organizations. This technology is called cognitive time-driven activity-based costing (CTABC), and it extends the established time-driven activity-based costing technology. CTABC accounts for human agents' cognitive time and the fact that cognitive time typically does not equal physical clock time for a given economic activity. CTABC also unearths a hidden lever effect that leads to considerable economic inefficiencies. An illustration of the proposed CTABC shows the limitations of contemporary approaches to cost assessments, which ignore errors caused by workers' cognitive time estimation. This paper contributes to the literature on cost accounting technology and the future of the digital economy. Specifically, it enriches the literature on the problem of the accuracy of employees' time estimates.

Keywords: Costing; Cognitive time; Physical time; Time distortion; Profitability (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:186:y:2023:i:pb:s0040162522006977

DOI: 10.1016/j.techfore.2022.122176

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