Saturday, February 4, 2006

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Work, leisure, and productivity

Last Sunday, the Boston Globe's Christopher Shea wrote a counterintuitive article about how well Europe compares with the United States:

In the face of rampant Europessimism, some contrarian scholars insist that European countries can thrive without embracing American-style labor markets (where most people can be fired at will) and relatively lean social programs.

Two years ago, the MIT economist Olivier Blanchard made news with an article claiming that Europe was gaining on the United States. True, gross domestic product per person was only 70 percent of America's, a gap that has existed for a generation. But by the measure of output per hour of work, Europe had reached 90 percent of American levels. Europeans were simply choosing to work fewer hours, Blanchard suggested-not an obviously dumb move. They were trading income for more leisure.

Sounds plausible.... until you get to this week's Economist. At which point you discover something very interesting... leisure time in the United States is on the increase:
A pair of economists have looked closely at how Americans actually spend their time. Mark Aguiar (at the Federal Reserve Bank of Boston) and Erik Hurst (at the University of Chicago's Graduate School of Business) constructed four different measures of leisure. The narrowest includes only activities that nearly everyone considers relaxing or fun; the broadest counts anything that is not related to a paying job, housework or errands as “leisure”. No matter how the two economists slice the data, Americans seem to have much more free time than before.

Over the past four decades, depending on which of their measures one uses, the amount of time that working-age Americans are devoting to leisure activities has risen by 4-8 hours a week. (For somebody working 40 hours a week, that is equivalent to 5-10 weeks of extra holiday a year.) Nearly every category of American has more spare time: single or married, with or without children, both men and women. The only twist is that less educated (and thus poorer) Americans have done relatively better than more educated ones (see chart). And that is not just because unemployed high-school drop-outs have more free time on their hands. Less educated Americans with jobs—the overstretched middle class of political lore—do very well....

Messrs Aguiar and Hurst think that the hours spent at your employer's are too narrow a definition of work. Americans also spend lots of time shopping, cooking, running errands and keeping house. These chores are among the main reasons why people say they are so overstretched (especially working women with children).

However, Messrs Aguiar and Hurst show that Americans actually spend much less time doing them than they did 40 years ago. There has been a revolution in the household economy. Appliances, home delivery, the internet, 24-hour shopping, and more varied and affordable domestic services have increased flexibility and freed up people's time.

So women are devoting more hours to paying jobs, but have cut their housework and other burdensome tasks by twice as much. Men have picked up some of the slack at home; but thanks to technology and other advances, there is plenty of free time left over for them as well, since they have yielded some of their paid working hours to women.

This trend ties into the biggest productivity advantage the United States has over the rest of the advanced industriaized world -- the retail and wholesale sectors. Increases on productivity in those arenas don't only benefit producers -- they lead to significant benefits for consumers, in the form of fewer time and resources devoted to essential household tasks, like shopping for groceries.

In the paper cited by the Economist, Aguiar and Hurst observe that:

The present study focuses exclusively on the United States.... to our knowledge, there are no studies using European data that perform a time-series analysis similar to the one below. This remains an important area for future research.
That would be some interesting research. It is possible that heightened U.S. efficiency in the retail and wholesale sectors -- and maybe, come to think of it, the housing sector as well, though economists tend to think about housing productivity in terms of construction as opposed to usage -- means that Americans work more and play more than Europeans.

posted by Dan on 02.04.06 at 03:25 PM


The only twist is that less educated (and thus poorer) Americans have done relatively better than more educated ones (see chart).

Well, if we're in a situation where people can choose between being workaholics with lots of money and little free time or middle class with more leisure time, that's reasonable. I know that that certainly applies to many well educated people I know-- they have opportunities to work on Wall Street or in certain consulting jobs, but don't want the stress and time commitment regardless of the money.

posted by: John Thacker on 02.04.06 at 03:25 PM [permalink]

Overall a very interesting story, but there are some questionable points within it. For example, one of the big increases in leisure time activity is eating in restaurants and with it a drop in time spent preparing meals. This accounts for a significant shift in the total results.
But is it really a shift of the nature described. Maybe one of the reasons for this shift is that people are so busy now with both parents working that the eat out because they do not have time to prepare meals. So is stopping by a quick food place to get take out on the way home rather then preparing a meal at home really an improvement in the quality of life the article suggest. I don't know, but it is clearly a debateable point.

posted by: spencer on 02.04.06 at 03:25 PM [permalink]

Dan, I have no data that tracks the trends in how Europeans and Americans spend their hours. However, "snapshot" time diary studies do exist which compare some European countries with America.

For example, this study has some data on the differences between Germany and the United States. According to this data, Americans have slightly more leisure time than Germans.

Here is another example of the differences between Sweden and the United States (scroll down to point 3). Again, Americans seem to enjoy more leisure than the Swedes. Surprising results if true.

posted by: Javier on 02.04.06 at 03:25 PM [permalink]

How much use are these macro studies, I wonder?

How much time "on the job" do people spend goofing off? In my experience, a lot. And it's probably more prevalent in higher-paid than in low-paid jobs, especially where there's piece-work involved. Definitely a question whether you can make the comparison without taking this into account.

Also, between countries. My experience of Germans, for instance, is that when they're at work they really work -- not true of many of Americans I've known (often, the same ones who scoff at how much mandatory vacation time the Germans get). There is always this competitive subtext in these inter-country studies.

Also, between time periods.

And, when you come down to it, so what? Does this study have any practical consequences? If not, then perhaps the time spent preparing it should be counted as leisure.

posted by: Econoclast on 02.04.06 at 03:25 PM [permalink]

I just read 6the Christopher Shea piece from the Boston Globe analyzing the Pontusson study. Without having read the Pontorson study itself, from what Shea writes it seems quite flawed at first blush.

The selection of countries and their groupings seem idiosyncratic. If you wish to compare the Liberal US to 'Social Europe' why lump the US in with a group of countries including Ireland, the UK, Australia, Canada, and New Zealand? This only serves to blunt the strengths of the US particularly when done as a unweighted average, which seems to be the Pontusson method.

According to Shea Pontorson postulates two groupings of European social market societies. The 'continental' group (Germany, Austria, Belgium, Netherlands, and Switzerland, and the 'nordic' group of social market societies (Norway, Sweden, Denmark, and Finland). The first thing I noted is that such relatively high unemployment countries as France, Italy, and Spain were completely ommitted. I can see merit to excluding Spain because I've heard that official unemployment runs much higher than actual in that country. But France and Italy?!!!

The 'average unemployment' of the continental group is 5.2% comparing favorably to the 'liberal' unemployment rate of 5.6%. Shea points out that this is not a weighted average and that German unemployment is 8.3%. A weighted average would pull the average up. He's not kidding. My informal estimate is that Germany holds 60% of the population of the entire group, so a weighted average figure might be 7% or higher. The current US figure is 4.6% I think. Add in France and Italy properly weighted and the difference worsens even more.

The nordic group of countries is an interesting case, but is the total combined population of the 4 nordic countries even as high as 10% of US population? They are very sparsely-populated countries so it might be instructive to compare them to Canada or Australia, I think.

It's also not clear whether the Nordic model works anywhere outside of the area (or has even been tried). Some data I've seen are persuasive that it may be working very well in the region. Good for them - but is this not a little like comparing avecados and lemons on the basis that they are both fruits?

posted by: Don Stadler on 02.04.06 at 03:25 PM [permalink]

Don, can it be true that someone calculated a non-weighted multi-national unemployment statistic? That would be an absurdity. I suppose a lot of people actually believed it.

posted by: Ron on 02.04.06 at 03:25 PM [permalink]


I don't know. My only source is Shea and that's what I think he wrote....

You are quite correct - it makes no sense. Unless perhaps you are trying to prove a point and aren't too scrupulous in the methods you care to use, I guess. But I don't know that.

posted by: Don Stadler on 02.04.06 at 03:25 PM [permalink]


"Even when it comes to unemployment-the pothole for European economies in recent years-the liberal- and social-market figures aren't as divergent as you might think. Germany had a dismal average unemployment rate from 2000 to 2003 of roughly 8.4 percent. But, overall, the continental social-market economies saw 5.2 percent unemployment over that period, compared with 5.6 percent for the liberal-market economies. (Pontusson doesn't weight the countries by size; if he did, Germany would drag down the European average.)"

This was the passage from the Shea link which I was referring to, Ron. It looks like an unweighted average to me. Perhaps Shea was simply wrong, or a misprint or something? ;)

posted by: Don Stadler on 02.04.06 at 03:25 PM [permalink]

Now I'm really confused. I dug up an old copy of the Economist (April 2005) and looked up the unemployment figures for the five countires in the continental group.

Germany 12.0
Belgium 12.7
Austria 4.6
Switzerland 3.9
Netherlands 6.5

Even as an unweighted average that doesn't seem to work out as anything near 5.2%! I would think a faily major boom in the eurozone would be needed to change this much, and I haven't seen any such reported.....

posted by: Don Stadler on 02.04.06 at 03:25 PM [permalink]

The German numbers are lower if you go by the international standards. If you work up to 15 hours in Germany and are looking for a full time job you count as unemployed. In the US for example you are employed as soon as you have any work at all. Even babysitting could count. 12% look very high to me even then.

posted by: Andreas on 02.04.06 at 03:25 PM [permalink]

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