<$BlogRSDURL$>

2004-07-02

Leisure makes us happy 

The manager of an Austrian company who convinced his employees to work three hours more per week for the same pay, summarises his experience [DE] in the FORMAT-weekly, which leads with the topic this week:
Instead of taking away money from the people, I find it much more humane if they give up something that they have in abundance: namely leisure.
The new weekly working time in that factory is now 41.5 hours, not devilishly much for sure, but are the workers and the managers right when they think they have leisure in abundance (apparently the union agreed to the deal)?

Crooked Timber discusses WalMart:
...it’s a hole in popular psychology which WalMart drives through in a coach-and-four.

That particular psychological quirk is the tendency of people in industrial societies to:
a) put an irrationally low valuation on their leisure time, and
b) believe that they have more spare time than they actually do.

There is actually decent evidence for this thesis; Richard Layard (who is apparently calling himself “Lord Layard” these days, egad) summarises it well in his lectures on the subject. But the intuition is much clearer; I cite as empirical evidence the deathbed reflections of every single person who didn’t express the wish that they’d spent more time at the office. A bit motherhood-and-apple-pie, perhaps, but it’s an important point that economists ought to take more seriously.

In any case, as John pointed out a while ago, if you’re spending your “leisure” time driving to an out-of-town megastore, then it’s not leisure in any meaningful sense. If you end up doing more of this than you would, in a fully informed and reflective state, want to, then WalMart has successfully outsourced a proportion of its cost base to you...
I recommend to read the Layard lecture referenced by Crooked Timber, or this summary in the Economist [also via the Crooked Timber article].

Both texts mention a pair of intriguing experiments:
...students at Harvard University were asked whether they would prefer (a) $50,000 a year while others got half that or (b) $100,000 a year while others got twice as much. A majority chose (a). They were happy with less, as long as they were better off than others.
The same Harvard students were also asked to choose between (c) two weeks' holiday, while others have only one week and (d) four weeks' holiday while others get eight. This time a clear majority preferred (d). In other words, people's rivalry over income does not extend to leisure. The result of this, suggests Lord Layard, is that developed societies may tend to work too hard in order to consume more material goods, and so consume too little leisure.
Layard's conclusion is that high income taxes are good because they keep people from working too much. Working longer comes at a double cost: leisure is lost, and in addition as an individual earns more, leading to an only temporary gain in happiness, all other individuals become persistently less happy with their own pay - almost a zero sum game on the level of society as a whole.

Thus, the current campaign [DE] of the Austrian industrialists lobby to convince the public that increasing working hours brings gains in competitiveness at no cost is based on exploiting a psychological fallacy of the work-force. In addition, the size of the differences in cost structures to low income countries is so big that working the lever of working time will not bring noticeable shifts in the competitiveness balance.


0 comments:
Post a Comment

Back to Main Page
This page is powered by Blogger. Isn't yours?