The distinction between work and leisure is just a model. And it’s breaking down

Economists like to divide up our lives into work and leisure. Like a lot of economics thinking, this is just a model. It compresses some details to make issues tractable. Which is normally fine.

But this model is very powerful – it is very widely accepted, and used outside the profession. The average punter is able to say, well, the cost of pizza delivery is $4, and it would take me 15 minutes to go to the shop and back, so I should get the delivery if I value my time over $16/hour. Since I make $20 an hour, I’ll get the delivery.

If this labour/leisure model fails, a lot of our thinking about the labour market needs a re-think. And this model fails in many ways.

The obvious one is housework. It’s not paid work but it is not really leisure. That ruins your model (and your GDP statistics) right there.

The problem with housework is that it is not really fun. And therein lies big problem #1.

FUN?

The question of enjoyment is a sliding scale that mocks the binary labour/leisure model. An artist might do what they do whether they make $0.00 like most graffiti artists, or millions and millions like British painter David Hockney.

The problem of fun wrecking the neat labour/leisure divide has received academic attention. This is from the people at Freakonomics:

“In an attempt to address such gray areas, the economists Valerie A. Ramey and Neville Francis classified certain home activities as labor and others as leisure. In their recent paper “A Century of Work and Leisure,” they employed a 1985 time-use survey in which people ranked their enjoyment of various activities on a scale of 0 to 10. Knitting, gardening and cooking were in the middle of the scale, with a 7.7, 7.1 and 6.6, respectively. These ranked well behind the three favorite activities — sex, playing sports and fishing (which scored 9.3, 9.2 and 9.1) — but firmly ahead of paying bills, cleaning the house and, yes, doing the laundry (5.2, 4.9 and 4.8).

But here’s where it gets tricky. Ramey and Francis decided that anything at or above a 7.3 is leisure, while anything below is home production. (Knitting, therefore, makes the grade as leisure; gardening and cooking do not.)”

Drawing a hard line through activities at 7.3 tries to preserve the binary labour/leisure divide, but really just proves it is silly. Academics should know – many of them have given up the chance of more lucrative careers for the opportunity to run their own research agendas.

There are trends exploding right now that make the work/leisure model look even sillier.

META -TRENDS 1: SPECIALISATION

Humans are forever trying to balance out survival with enjoyment. Once upon a time it didn’t matter if you liked hunting and making fires. You had to do those to survive.

The long run of economic development has led to more and more specialisation. That should man that people can make economic choices that allow them to make work fun.

The doctor who is not that chatty can now be a surgeon, not an all round physician. The dairy farmer can focus on making one kind of really excellent fetta. The programmer can focus on using the language they code best in, etc.

Or indeed the programmer can become a barista, or make popular Youtube videos, or join the artisanal revolution and brew their own beer, or open an online shop that sells scarves.

Artisanal is lucrative
$83/kg for biscuits: Artisanal can be lucrative

In all these cases there might be a compensating differential. They know they could make more doing something else, but they choose the job that delivers psychic income.

As Matthew Yglesias wrote in 2012:

“The non-monetary aspects of job quality are an incredibly neglected topic in economics.”

META-TRENDS 2: TECHNOLOGY AND TIME.

Fun has already run the sword through the labour/leisure model, but technology gives it a twist that makes the model’s intestines fall out.

The end of the distinction between home and office means you answer emails while you are sitting on the couch. Technology also allows one to pay bills on the computer at work, and surf facebook.

Home is a workplace, and the office is a place of leisure. I’m sure there was always a bit of leisure at work and vice-versa (e.g. golf with clients on Saturday), but technology has made this pervasive. The labour/leisure model depends on having neat blocks of time that can be totted up for one column or another, not on a slow bleed where our whole life revolves around flicking between tabs.

Technology means we also have more leisure, and we spend it doing things that look a lot like work. Things like editing Wikipedia or making open source software. If your leisure involved producing goods for others to consume, that is very hard for the model to neatly explain.

In neo-classical economics, labour supply curves are derived from the labour/leisure trade-off. The worse the model performs, the worse the understanding we will have of labour markets.

Assumes a trade off between income and leisure hours. Source: Wikipedia
Assumes a trade off between income and leisure hours. Source: Wikipedia

And furthermore, if people choose to work a lower-paid job due to the higher satisfaction that brings them, they ought to be happier. But the shift would depress productivity statistics and cut GDP by a notch.

We live in a world where people have a great deal of choice,where the labour market is producing puzzling results and where labour market reformers are just itching to get started. The models we have and the measures we use must catch up with real-life, and fast.

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

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