Value of work and leisure

A commentator asked about the value of leisure time. As it happens I have written a report about this (not yet published).

Based on time diaries (ATUS and HETUS) Americans 20-74 on average have 15.25 hours of sleep, leisure and personal care per day. Swedes this age have 15.55 and Europe (population weighted average of Germany, France, Italy, UK, Spain, Poland, Hungary, Baltic nations, Slovenia, Sweden, Norway, Finland and Belgium) has 16.01.

Europeans have almost 280 hours more leisure per year compared to Americans. Some of it is involuntary (or tax and benefit induced) unemployment and other forms of social insurance. About 40% of the differences in work/leisure are explained by the higher American labor force participation rate.

The question is how much we should value leisure. The hourly wage in the US is $18.4, and $15.6 PPP adjusted for the Euro-area (the latest figures I could find for Europe are for 2002, they have probably gone up a little). On one hand this underestimates the cost, since this is a usually measure for production workers, and does not include many high-earners, self-employed etc.

On the other hand this is the marginal value of work, which is higher than the average (if you have lots of free time you value each hour less than someone who only has a little free time). Also, much of it is involuntary unemployment, people would like to work for $15.6 or even less, but no one would pay them that.

Let us be generous and value each hour at $16. That is about $4400 in leisure time advantage for Europeans compared to Americans. This accounts for third of the raw GDP gap between Europe and the US.

What about the demographically adjusted gap? I estimate that to be $19.600 per capita. However European-Americans also work more, and have less free time. According to the American Time Use Survey non-Hispanic whites had 65 hours less leisure than the US average. So Europeans enjoy a 342 hour advantage in leisure. For the average value of free time to account for the Europe-US difference, it should be $57 per hour. I don’t value my free time that much, do other people? At the European hourly wage of $16 their advantage in leisure is worth $5.500 per person, accounting for 28% of the gap in income between Europeans and European-Americans.

I (it should be emphasized subjectively) believe this overestimates the differences. Americans, the British and Scandinavians have good norms, and enjoy and take pride in their work. In all societies people who have intrinsically rewarding jobs, such as teacher, policemen or researchers, derive less dis-utility from working. The main achievement is for society and individuals to take pride in work that is not intrinsically rewarding, but nonetheless valuable for society (administrators and welders are needed).

According to the latest available World Value Survey 87% of Americans, 83% of Brits, and about 60% of Swedes say that they take “a great deal” of pride in the work they do.

Other European countries, France and Germany in particular, have after decades been influenced by Social Democratic ideology in considering work a form of exploitation that should be avoided.

The corresponding figure for Italy is 30%, Netherlands 26%, Germany 18%, France 15%.

In a healthy society working and doing something (anything) well, is part of life satisfaction and a purposeful life. Like Marx I believe that alienation is a huge problem, but unlike Marx I don’t believe it is the structure of work in a capitalist society that leads to alienation of production workers, it is Marxist ideology itself!

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