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Time in Economics, part I

Time, Money, and Inequality

Temps, monnaie et inégalités
Jooyeoun Suh and Nancy Folbre
p. 3-24

Abstracts

The advent of nationally-representative time-use surveys has generated a wave of new empirical research on time devoted to unpaid work and challenged traditional resistance to considering its impact on household living standards. Measurement and valuation of such work can generate estimates of “extended income” on the household level, with significant implications for assessment of income inequality. While few such estimates have been generated to date, this essay argues that they are conceptually desirable, empirically feasible, and politically important. A critical assessment of objections to the valuation of unpaid work provides support for this argument, which is further strengthened by a historical account of the social forces driving the expansion of modern time use surveys.

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1When Benjamin Franklin, the eighteenth century inventor and polymath, declared that “time is money” he meant that neither should be wasted (1748). More sophisticated treatments of time as a form of currency emerged in nineteenth-century political economy, with David Ricardo’s theory of relative prices based on embodied labor hours (1817). In the early twentieth century, small-scale time-use surveys were conducted as a means of studying the relative living standards of urban and rural households. By the late twentieth and early twenty-first century, extensive data from time-use surveys was being collected, partly as a result of pressure from women’s groups who demanded more attention to the value of their traditional contributions.

2Yet the discipline of political economy remains remarkably resistant to the notion that both money and time should be jointly considered as determinants of household living standards, on the grounds that the two currencies are not (contrary to Benjamin Franklin) completely fungible. In this essay, we challenge this resistance, arguing that the ambiguities and uncertainties that render time and money imperfectly commensurable should not discourage judicious efforts to approximate the market value of non-market work and assess their implications for inequality in living standards. We explain why both inequality in work hours and the value of non-market work are relevant to current debates concerning trends in inequality.

3We locate our analysis in the history of economic ideas, first addressing three long-recognized conceptual problems that have discouraged valuation of non-market work: definitions of socially necessary labor time, tension between subjective and objective valuations, and relationships between resources and needs. Next, we address the common, but unpersuasive, argument that measurement and valuation of time devoted to non-market work is empirically infeasible. Our brief historical account of the emergence of time-use surveys reveals a process of political mobilization that gradually overcame resistance to data collection.

4Many aspects of time use are relevant to the analysis of living standards and quality of life. Considerable research has focused on the distribution of leisure time, or, more broadly, “discretionary time” (Goodin et al., 2008). Individuals’ decisions are certainly influenced by their desire for leisure. However, macroeconomic theory emphasizes the importance of market income, a measure of income that we consider incomplete. Likewise, analysis of the distribution of household income often relies entirely on market income, ignoring the productive contributions of non-market work. Our larger research agenda aims to show that this single-minded emphasis on market income is misleading (Suh and Folbre, 2016).

5We emphasize the potential for useful, if approximate, estimates of “extended income” that include the imputed value of non-market work as well as market income. We explain why such estimates are relevant to the analysis of inequality on the individual, household, national, and international levels and summarize several recent empirical studies substantiating this point. We conclude with a call for more research as well as explicit effort to integrate the value of time into larger measures of living standards.

1. Time and Economic Well-Being

6Human labor has long been recognized as a factor of production that can be denominated in terms of time. Such denomination is complicated by differences in the productivity, intensity, and subjective experience of work. An additional complication concerns the allocation of work—as well as its products—among members of a household or larger group. In assessments of relative living standards, labor time, like money, is a resource whose value must be assessed relative to needs. Yet these complications are by no means unique to valuation of unpaid labor, and should not discourage greater empirical attention to its contribution to income.

1.1 Work Productivity and Intensity

  • 1 By some accounts, Marx intended to emphasize the average, rather than minimum, number of hours requ (...)

7David Ricardo’s efforts to develop a theory of relative prices based on direct and indirect labor inputs elicited many objections, among them the observation that some workers produce more per hour than others, either because they work smarter or harder. This objection was squarely met, if not completely overcome, by Karl Marx, who argued persuasively for attention to the minimum hours of standardized labor, or “socially necessary abstract labor time” rather than the actual number of hours embodied in a commodity.1 By his account, the dynamics of capitalist competition would exert constant pressure on firms to move closer to the socially necessary standard.

8This argument came into play in the so-called domestic labor debates of the 1970s, in which some Marxian theorists contended that domestic labor, like wage labor, could be exploited, while others rejected this notion out of hand (Seccombe, 1974; Himmelweit and Mohun, 1977; Molyneux, 1979). One major objection was that domestic labor might simply expand to fill the time allotted to it because no competitive pressure would drive inefficient producers out of business. In other words, it would not meet the criterion for socially necessary labor.

9Some argued that working class families are probably forced to use their time efficiently in order to meet their needs—a definition of rationality distinct from neoclassical optimization—but few Marxists proved willing to consider the possibility that “exploitation comes home” (Folbre, 1982; Gardiner, 2000). Developing a framework influenced by this debate, Susan Himmelweit argued that the distinction between work and non-work is too confining, and many activities conducted within the family cannot and should not be defined as work (Himmelweit, 2000). Today, few self-described Marxist theorists are willing to apply the term “exploitation” to domestic labor, even as they concede the relevance of intra-family inequality.

10This debate has been largely superseded by a growing time-use literature that follows early twentieth-century economist Margaret Reid (1934) in defining work as any activity that could, in principle, be performed by a third party (other than the worker or the consumer) for pay. This criterion includes tasks such as shopping, cleaning, food preparation and caring for children, the frail, and the elderly; it does not include leisure or personal activities such watching TV or sleeping. One cannot generally pay someone else to have fun or to sleep on one’s behalf.

11Ambiguities remain: studying is an activity that resembles work in many respects, but one cannot pay someone else to actually do it (as opposed to tutoring, or assistance with it). Likewise, socializing with colleagues from work may be subjectively experienced as work, even though it would be coded in time use surveys as leisure. These and other ambiguities are typically resolved by conventions: studying is typically treated as an activity separate from both work and leisure, and subjective variation is typically ignored (otherwise much paid employment, which generates significant satisfaction and utility, would not be considered work). Travel and commuting time are generally considered work when the purpose of the travel is work-related, leisure when the purpose is leisure-related. Finally, intimate sexual services are excluded from consideration out of respect for respondents’ privacy.

12The “third party” criterion sidesteps both the Marxian preoccupation with “socially necessary” labor and the neoclassical emphasis on the “disutility” of labor in favor of a more categorical and empirically tractable approach. In this respect, it parallels acceptance of household market income—as reported in surveys or tax returns—as a measure of household living standards. Market income is seldom reported in terms that perfectly conform to its theoretical definition. Survey questions typically avoid asking respondents to estimate increases in household wealth that take the form of unrealized capital gains or the net depreciation of physical assets such as houses and cars. Nonetheless, household market income provides a reasonable, if approximate, measure of a household’s collective buying power. Likewise, the number of hours of non-market work performed by an individual or a household provides a reasonable, if approximate, measure of goods and services produced for own consumption.

13Still, measurement problems in the non-market domain deserve serious attention. From a relatively early date, time-use studies have focused on “activities” (Szalai, 1972). Less attention has been devoted to the constraints of supervisory responsibility imposed by the care of young children, individuals who are sick or disabled, and the frail elderly.

14The empirical relevance of this distinction between activity and responsibility is particularly apparent where young children are concerned. Conventional and widely-cited measures of “active” child care, such as feeding, bathing, reading aloud to or transporting a child, understate the temporal demands that children impose. They omit supervisory or “on-call” care, including time when infants are asleep. For young children in particular, supervisory care demands far exceed active care demands, and impose more serious constraints on parental (particularly maternal) labor supply (Folbre et al., 2005; Folbre, 2008).

15Supervisory care is also relevant to economies of scale in childrearing, because supervising several children at once seldom requires as many adults as meeting their hands-on physical needs. The demands of both forms of care are determined to a very large extent by the ages of children and the extent of conflict between them. A related dilemma concerns simultaneous/joint activities. An activity in time-use surveys is typically measured in terms of answers to questions such as “What were you doing during this time period?” Yet most people are multitasking beings who often simultaneously engage in more than one activity. Many national time-use surveys also ask “Were you doing anything else at the same time?” as a way of measuring such secondary activities (Folbre and Yoon, 2007; Gauthier et al, 2004). Yet researchers do not always take advantage of such data.

16“Work intensity” measured by overlapping activities or the presence of multiple activities is an important aspect of work process that has received very little attention in the economics literature. The effect of work intensity likely depends on the level of concentration and effort required for distinct activities. In some cases, engaging in two activities at once can be pleasant as well as productive—such as gardening while playing with children. However, some activities, conducted simultaneously, may require considerable effort and lead to significant stress—such as cooking dinner while trying to comfort two screaming children. A carefully disaggregated analysis of joint activities can yield important results: in general, women tend to engage in more joint production than men (Floro, 1995a, 1995b).

17Fortunately, a new generation of time-use surveys, including the American Time Use Survey or ATUS (conducted on an annual basis since 2003), offers remedies for both of these problems. The ATUS asks respondents to report the time that children under the age of 13 are “in the care” of older respondents. Also, by recording the number and age of other persons present while respondents are engaging in activities, this survey makes it possible to include measures of the “density” of child care, or ratio of adults to children present, an important element in care intensity. Unlike some time-use surveys, the ATUS does not collect information on subjective measures that might give some indication of emotional demands or other sources of stress. While such information could prove useful, however, it does not bear directly on the measurement of either market or extended income.

18The proliferation and improvement of time-use surveys could mitigate many measurement problems. By the same token, more ambitious analysis of existing data could help dramatize the potential benefits of improved data.

1.2 Subjective vs. Objective Valuation

19Reliance on the third-party criterion does not eliminate the tension between classical and neoclassical theory in time-use research. Neoclassical economists sometimes argue that non-market activities are not really “work” if they are an important source of intrinsic satisfaction. The neoclassical redefinition of productive labor as any labor performed within the market (as distinct from non-market work) is largely based on the notion that work, by definition, yields disutility that is compensated, in the market, by the utility of the income received. Indeed, the assumption that non-market work yields direct and indirect utility helps explain why neoclassical theorists have resisted valuation of non-market work as a component of “extended income” consistent with national accounting definitions of income, as opposed to the Beckerian notion of “full income,” a utility-based concept that includes the subjective value of leisure (Becker, 1965; SNA, 1993).

20But the tension between the measure of work operationalized in time-use surveys and that built into textbook versions of neoclassical theory is reduced by methods that can allow for separate consideration of the subjective experience of time. Both paid and unpaid work generate forms of satisfaction that can be defined as “process benefits or costs” (or utility/disutility) (Juster, 1985). People rank the pleasure that they get from various activities (Dow and Juster, 1985). Some studies ask family members to respond to beepers that prompt them to individually record their activities and their feelings, making it possible to study both their subjective experience and how it compares to that of other family members who are present (Larson and Richards, 1994). Survey data on self-reported happiness and “satisfaction with time for self” can be used to measure the within-household distribution of subjective well-being (Phipps et al., 1996; McDonald and Douthitt, 1992).

21In a particularly innovative round of the Canadian General Social Survey on Time Use, Statistics Canada collected data via telephone survey on time-use that included a set of seven questions on the degree to which individuals felt a “time crunch,” adapted from the work of John Robinson (1993). Among middle-aged men and women, men averaged an hour more a day of leisure than women. Women reported less positive feelings about their time use. A much larger percentage of women than men answered yes to the question, “Do you feel trapped in a daily routine?” (42% to 33% for employed and married, 27% to 15% for not employed and married). Gender differences in the question “Would you also like to spend more time alone?” were also pronounced (Frederick, 1995, 39). The Australian Bureau of Statistics has adopted a shorter, but similar, set of questions. More recent studies show that prolonged, highly enjoyed daily activities do not always predict higher levels of cumulative subjective well-being (Zuzanek and Zuzanek, 2015). Higher level of life satisfaction is closely related to “balanced use of time” rather than “increased participation in individual activities” (ibid., 839).

22“Happiness research” has also been extended to explore implications for national indicators and economic growth patterns. The Center for Bhutan Studies has constructed a Gross National Happiness index that is intended to provide appropriate indicators and domains for Bhutanese development (Ura et al., 2012). The index measures the extent to which members of the population approach a “sufficient level” in a range of dimensions related to well-being. The index is constructed by equally-weighting nine dimensions of well-being: psychological well-being, time use (whether respondents feel that they have sufficient time for various nonmarket activities), community vitality, culture (diversity and resilience of cultural traditions), health, education, environment (perception of ecological knowledge), living standards, and governance (equity).

23An interdisciplinary group of researchers has proposed the development of National Time Accounts for the U.S. (Krueger et al., 2008). One measure applied to evaluate subjective wellbeing calculates an Unpleasantness Index, or U-Index, based on reporting of negative emotions such as tense/stressed, depressed/blue, irritated/angry. Surveys of women in the U.S. showed that childcare had a U-Index quite similar to tasks such as working for pay and commuting (Krueger et al., 2009). Another important subjective consideration—one likely to have a causal impact on the U-Index and also bear directly on the analysis of human capabilities—is the extent to which time allocation is freely chosen (Burchardt, 2010). In principle, survey respondents could be asked to consider this issue as well.

24While relatively little research to-date explores inequality in time-use-related subjective wellbeing, such efforts could prove feasible in the future. In the meantime, it is worth noting that very few studies of inequality in market income are called to a halt because they do not include measures of the happiness or utility derived from that income, or the extent of free choice involved. Surely the same leniency should apply to analysis of inequalities in time use and extended income. Objective measures of the amount of time devoted to work versus leisure, as well as the estimates of the value of unpaid services provided to family, friends, and neighbors are useful on their own account. They also represent a prerequisite for more detailed analysis of the relationship between time use, subjective well-being, and human capabilities.

1.3 Resources vs. Needs

25Efforts to measure economic wellbeing on the household or family level require, among other things, some adjustment of income to take account of need. This issue came to the fore in nineteenth-century debates over living standards, motivating efforts by Ernst Engel, among others, to analyze household expenditures (Chai and Moneta, 2010). It is worth noting that of the households that Engel analyzed almost all included a full-time wife and mother, engaged in many hours a week of domestic labor, including meal preparation and child care. Common sense suggests that such labor increases household consumption and improves living standards.

26The task of equivalizing income in order to make meaningful comparisons across households of different size and composition can be approached from two very different theoretical directions. Neoclassical theory focuses on models of equivalent utility based on revealed preferences in consumption, recognizing conundrums regarding interpersonal utility comparisons and the difficulty of distinguishing the effects of preferences and relative prices or technology (Browning et al., 2013; Pollak and Wales, 1979). From this theoretical perspective, for instance, women could engage in more unpaid work than men either because they simply enjoy doing this work or because they are more efficient at performing it.

27By contrast, classical theory, implicit in national income accounting, sets utility comparisons aside, aiming simply to more accurately measure income, consumption, and relative material needs (Ebert and Moyes, 2003). This process is not as simple as it might seem, because it is practically impossible to directly observe either household economies of scale or the costs of children relative to adults, and these can be estimated in a variety of seemingly arbitrary ways (Nelson, 1993).

28Some institutional economists follow Amartya Sen’s lead, applying a capability approach, which offers an alternative to the standard income and expenditure measures by accounting for the heterogeneity of needs among individuals. For instance, all else equal, households including a person with physical or mental disabilities requires more resources than others. In principle, income and expenditure can be adjusted for differences in the capacity to function (Kuklys, 2005). In practice, however, few household surveys collect information on specific needs.

29Policy-oriented researchers often resort to a simple scale in which a single parameter, an exponent applied to the number of household numbers, captures the effect of both economies of scale (non-rivalry in consumption of household public goods and in the production of non-market goods and services) and the needs of children relative to adults. The most commonly used equivalence scale is the square root of household size because the exponent of .5 lies halfway between two implausible extremes: a straightforward per capita adjustment (implied by a parameter of 1), and complete lack of adjustment for number of household members (implied by a parameter of 0) (Johnson et al., 2005).

30Empirical estimates clearly show that the selection of parameters has significant implications for comparisons of inequality and poverty across countries. Two vulnerable groups—children and disabled people—are especially relevant to comparisons between families with children or disabled members and those without (Buhmann et al., 1988; Kuklys, 2005). Regarding children, most estimates use scales that show smaller costs for them. Some research, however, suggests that children could cost even more than adults when time cost is considered (Bradbury, 2008). For instance, the three-parameter scale used in the Supplemental Poverty Measure by the Census Bureau is larger for a household with one adult and one child than for a household with two adults. With respect to disability, Kuklys (2005) finds income of a disabled individual needs to be adjusted for 1.56 times more than the income of a non-disabled individual to achieve the same level of income satisfaction.

31Several important lessons emerge from this literature. Estimates of the market value of unpaid work should, like estimates of market income, take the size and composition of households into account. Both economies of scale and the relative cost of adults relative to children may differ for these two components of extended income. Our empirical research based on estimates for the U.S. derived from the American Time Use Survey shows that it is no more difficult to estimate these parameters for the value of non-market work than for market income. (Folbre et al., 2016). In both cases, the results are approximate, and call for sensitivity analysis.

32Finally, failure to consider the impact of non-market work on household living standards probably biases existing measures of the equivalized value of market income: standard equivalence scales, such as the square root of family size, are typically applied over long time periods and across countries despite enormous variations in the percentage of women engaged in paid employment. Yet the movement of women into paid employment typically reduces the time available for domestic work and child care, and often leads families to substitute cash expenditures for goods and services once provided at home. The reduction of domestic labor time increases cash needs.

33In sum, none of the three objections to consideration of the market value of non-market work discussed above should deter empirical research on this topic. If anything, they make such research seem even more urgent.

2. The Measurement and Valuation of Non-Market Work

34The most common objection to measurement and valuation of non-market work has probably been that it is empirically intractable. But the history of efforts in this direction reveals long-standing debates that have surged, receded, and surged again in patterns shaped by collective action and public policy. A wave of feminist activism in nineteenth-century Great Britain and the U.S. protested that failure to recognize the economic value of women’s family work contributed to devaluation and disempowerment (Folbre, 2009). The problem was almost immediately acknowledged by members of the professional establishment, including the Scottish economist William Smart and the Norwegian statistical office (Folbre, 1991; Aslaksen and Koren, 2014). Such acknowledgements were largely discounted.

35Yet the issue continued to pop up in scientific discourse. The earliest estimates of the value of household production published in the U.S. applied a cursory formula: take the number of married women without paid occupations and ask what they would be paid if employed as domestic servants or farm workers. Applying this formula, a study sponsored by the National Bureau of Economic Research in 1921 estimated that the value of housewives’ services had declined from 31% of market national income in 1909 to 25% in 1918 (King et al., 1921). A similar formula was applied in several subsequent discussions.

  • 2 In general, Kuznets argued against valuation of non-market work. It has been claimed that he later (...)

36The eminent Simon Kuznets noted, in passing, that housewives’ services in the U.S. could be valued at somewhat more than one quarter of national income in 1929 (Kuznets, 1941, 431).2 Colin Clark, another notable figure in the history of national income accounts, estimated their contribution at 27% of the Gross National Product of the United Kingdom in 1956 (Clark, 1958, 1965). Norway and Sweden offered official estimates of the value of household production in the late nineteenth and early twentieth century, but, in the 1930s, moved toward conformity with the practices of other statistical offices, which excluded it (Aslaksen and Koren, 2014).

37In the U.S., women’s entrance into the economics profession stimulated more sustained attention to family work (Folbre, 1998). Books by economists Hazel Kyrk (1929) and Margaret Reid (1934) summarized the results of early time-use surveys and inaugurated the new field of family and household economics. Reid, as noted previously, is best known today for her clear articulation of the “third party criterion” used to define work as activities that another person could, in principle, be paid to perform. This definition is reflected in standard coding protocols for time-use surveys today.

38This early emphasis on home economics in the U.S. was pursued by Kathryn Walker, who published many early studies of time use in the household (see, for instance, Walker, 1969). However, it received little attention from the mainstream of the economics profession in the U.S. until 1972, when an essay by William Nordhaus and James Tobin provocatively titled “Is Growth Obsolete?” linked the omission of non-market work to omissions of other non-market processes such as environmental degradation and natural resource depletion. Henceforth, family and environment would often be linked. But Nordhaus and Tobin framed their argument in terms of a divergence between measures of output and measures of welfare, using more explicitly neoclassical reasoning than their predecessors. Their alternative “Measure of Economic Welfare” or MEW, aimed to provide a more accurate assessment of welfare, as distinct from income or consumption.

  • 3 This theoretical distinction is discussed in more detail in Abraham and Mackie, 1995.

39From this point onward, two distinct approaches to valuation became apparent. Neoclassical theorists placed more emphasis on subjective well-being even as national income accounting began to revise and extend measures of income and consumption. Oli Hawrylyshyn noted the tension between opportunity cost approaches to valuation (based on assumptions of utility maximization) and replacement cost approaches as early as 1976. The opportunity cost reflects the individual preferences revealed by utility-maximizing decisions; the replacement cost approach applies market prices to inputs into non-market work (primarily labor time).3

40Particularly important contributions to the national income accounting approach were made by Oli Hawrylyshyn (1976), John Kendrick (1979), Robert Eisner (1989), and Luisella Goldschmidt-Clermont and Elisabetta Pagnossin-Aligasakis (1999). The neoclassical approach, however, received a tremendous boost from the “new home economics”, especially Gary Becker’s influential Treatise on the Family (1993). Within this framework, both household production and leisure yield utility to family members, who reveal their preferences through the allocation of time and money in the household. This emphasis on utility departs from national accounting procedures that rely on market prices, ignoring both consumers’ and producers’ “willingness to pay.”

41Research initiated outside the economics discipline also influenced the discourse. The deployment of representative time-diary surveys made it possible to directly examine amounts of time devoted to non-market work, which proved both surprisingly high and surprisingly resistant to decline over time. The Multinational Comparative Time-Budget Research Project, undertaken under the direction of Alexander Szalai with support from European sponsors, represented an important example of this approach (Szalai, 1972). The quantified results of these surveys countered initial claims that non-market work could not be measured and spurred the development of a new field of research on time use.

42At the same time, a burgeoning international feminist movement began to assert that women’s unpaid work was an important source of gender inequality. The Third U.N. World Conference on Women in Nairobi in 1985 passed a resolution to this effect (Luxton, 1997). New Zealand activist and policymaker Marilyn Waring made common cause with environmentalists and helped mobilize public support for implementation of time-use surveys with her widely-read book, If Women Counted (Waring, 1988; Bjornhold and McKay, 2014).

43The Canadian case offers a vivid example of the impact of political pressure. After the national statistical agency, Statistics Canada, offered an estimate of the value of household work in 1971 as about 41 percent of GDP, the National Council of Women requested more detailed household-level information (Adler and Hawrylyshyn, 1978; Hawrylyshyn, 1976, 128). In 1991, a Canadian homemaker garnered national publicity when she refused to fill out the official Census form because it did not recognize her efforts as work. The subsequent controversy persuaded the Canadian government to insist on more attention to the issue (Luxton and Vosko, 1998, 65). In 1995, Canadian representatives at the Fourth U.N World Conference on Women in Beijing strongly supported its official resolution to the same effect.

44The official UN resolution, bolstered by the efforts of women’s groups in many countries, encouraged significant expansion of time-use data-collection efforts by national statistical agencies. While no explicitly comprehensive list is available, a concatenation of lists provided by the U.N. Statistics Division and the Centre for Time Use Research at the University of Oxford documents slow growth from 1930 to 1989, doubling in the 1990s to 42, and more than doubling in the first decade of the twentieth century to 110 (see Figure 1).

Figure 1. The growth of official national time-use surveys 1930-2015

Figure 1. The growth of official national time-use surveys 1930-2015

Sources: U.N Statistical Office, http://unstats.un.org/​unsd/​demographic/​sconcerns/​tuse/​tu3.aspx; and Oxford University Centre for Time Use Research, http://www.timeuse.org/​mtus/​surveys. Both websites accessed January 25, 2016.

45Between 2010 and 2015, 36 surveys were administered. Linear extrapolation of this number suggests that about 72 will be administered in the current decade, below the number for the first decade of the twenty-first century, but far higher than the 1990s.

46Important collections of data include the Harmonized European Time Use Survey (HETUS), the Multinational Time Use Studies (MTUS) archive at University of Oxford, and the American Heritage Time Use Surveys including pioneering research by John Robinson, and the official American Time Use Survey (ATUS), collected on an annual basis since 2003. This growth has paralleled efforts to measure trends in non-market assets and ecosystem services, such as the United Nations’ System of Economic-Environmental Accounting (SEEA) and the World Bank’s Wealth Accounting and Valuation of Ecosystem Services (WAVES).4

47With improved collection of data on non-market work have come improved efforts at valuation, often through the development of “satellite accounts” that can revolve around the conventional estimates. Such accounts provide a measure of extended Gross Domestic Product by adding an imputation of the value of non-market work, but keeping this component separate in order to preserve continuity with previous estimates of market Gross Domestic Product. Notable efforts include Duncan Ironmonger’s estimates of Gross Household Output in Australia (1989), and for OECD countries, Giannelli et al. (2012) and Miranda (2011). Estimates of expanded Gross Domestic Product (GDP) in the U.S. have been provided by Landefeld et al. (2000, 2009) Bridgman et al. (2012), and ourselves (Suh and Folbre 2016). While methodological problems remain, estimates such as these represent important steps toward improved valuation of non-market work.

48This forward motion signals growing interest within the national income accounting community, as in the internationally influential Report by the Commission on Economic Performance and Social Progress Revisited (Stiglitz et al., 2009). Yet the pace of change remains slow. Satellite accounts are easily disregarded, because they do not challenge or alter conventional measures of the level or growth of Gross Domestic Product. And a relative lack of attention to measurement of extended income on the household level has made it difficult to integrate discussion of the value of non-market work into current debates concerning levels and trends of inequality.

3. Time, Non-Market Work, and Inequality

49A patchwork of empirical studies clearly demonstrate both the direct and indirect relevance of time use to inequality in living standards. Estimation of hours available for personal care and leisure provides a metric of living standards independent of income. Estimation of extended income provides another, equally relevant, indicator of inequality, often taking a very different shape than inequality based on market income alone. International comparisons are also affected. Estimation of extended income also provides an additional metric for analysis of inequality across countries, and, divided by total hours of work, a different metric of productivity.

3.1 Leisure Time, Time Poverty, and Discretionary Time

50Gender differences in leisure time depend heavily on the ways leisure is defined (see earlier discussion of supervisory child care time). Some economists argue that these differences are not significant in the developed countries (Burda et al. 2007). However aggregate data for the developed countries indicates that women still work longer total hours (paid and unpaid) than men (UN Women, 2015). Gender differences tend to be greatest in households with young children.

51Leisure time is also relevant to analysis of class differences. One historical study of the U.S. argues that low-earners worked longer hours for pay than high-earners around 1890, but that a century later the pattern was reversed, with high-earners working longer hours (Costa, 1998). As a result, monetary measures may overstate the relative standard of living of high-earners. Much as people require a minimum level of market income in order to escape income poverty, they may also require a minimum level of time unencumbered by the demands of paid and unpaid work to escape “time poverty” (Vickery, 1977). One international study compares actual hours worked to a hypothetical calculation of how much individuals would need to work to meet their basic needs, revealing considerable inequality in this measure (Goodin et al., 2008).

52Cross-country comparisons reveal significant differences in the average amount of time devoted to paid employment. Workers in the European Union, for instance, enjoy considerably more paid vacation time and flexibility. As a result, they devote 16% fewer hours to paid employment per year than workers in the U.S. (Rosnick and Weisbrot, 2007). Consequently, conventional measures of GDP per capita yield very different rankings than those based on GDP per hour of paid employment, a better measure of productivity.

53While the conventional way of measuring “time poor” is to look at how much free time one has after all the other hours that are actually spent are taken out, some scholars argue that the residual time remaining after subtracting unavoidable activities (necessities) or “discretionary time,” is better suited to assessment of welfare and inequality (Rice et al. 2006; Goodin et al., 2008). Three main activities of daily living—paid labor, unpaid household labor, and personal care (including sleep)—are considered “necessary time” in each dimension. Single parents are low in discretionary time because of sole responsibility of family and low pay due to long hours to make ends meet (Burchardt, 2010).

54Both time poverty and discretionary time offer new ways of measuring temporal inequality. But they should be accompanied by measures of household income that include consideration of the value of the goods and services produced by non-market work.

3.2 The Distribution of Extended Income Across Households

55Analysis of data from several European Union countries and the U.S. shows that valuation of non-market work at replacement cost—what it would cost to hire someone to provide comparable services—has an equalizing effect on extended income and consumption (Aslaksen and Koren 1996; Frick et al., 2012; Frazis and Stewart 2011; Gottschalk and Mayer 2002; Folbre et al., 2014). Low-income households do not seem to devote significantly more time to household production (including childcare activities) than high income households, and unemployed men don’t perform significantly more housework than those who are employed (Frazis and Stewart, 2011). Rather, the equalizing effect of valuing household production results primarily from addition of a relatively large constant value to most household incomes.

56Unfortunately, the relative paucity of time-use data for earlier periods makes it difficult to assess the effects of inequality over time. Most of the affluent nations of the world, including the United States, experienced significant increases in women’s labor force participation during the latter half of the twentieth century, with concomitant declines in total time devoted to housework. This suggests that the equalizing effect of the non-market component of extended income has diminished over time. As a result, inequality may have increased even more than indicated by trends in market income.

3.3 The Distribution of Extended Income Across Countries

57The relative amount of time devoted to unpaid work varies less than might be expected across countries, partly because the demands of both subsistence production and wage employment are great in low-income areas of the world. Rankings based on extended income per capita rather than market income per capita are not substantially different, and do little to reduce international inequality.

58The Organization for Economic Cooperation and Development (OECD) has published estimates of the value of non-market household production in 27 countries for 2008, using a replacement cost approach (Ahmad and Koh, 2011). The value of household production as a share of GDP varies considerably, but is above 35% in several countries generally considered affluent—Australia, New Zealand and Japan—and below 20% in Mexico and South Korea, countries with lower GDP.

59While these findings may reflect differences in survey design, international differences in public policies, especially those relevant to women’s participation in paid employment, and/or subsistence agricultural production also exert an influence. Comparisons between countries at similar levels of development confirm the relevance of public policies. One detailed analysis of market and extended income for the U.S. and Germany confirms that conventional measures overstate relative levels of income and consumption in the U.S., because German women spend more time preparing meals and providing child care at home (Freeman and Schettkat, 2005).

Conclusion

60The narrative outlined above describes an important chapter in the invention and deployment of economic accounting systems. The development of time-use surveys represents a logical extension of earlier efforts to develop national censuses, national income accounts, and household and labor force surveys, all shaped by political forces as well as practical concerns. Objections grounded in theoretical concerns created resistance to data collection and initial survey designs suffered from conceptual inadequacies. Yet the publication of interesting and substantive results, however preliminary, can potentially motivate new ideas, better categories of analysis, and new survey instruments. As the research reviewed above demonstrates, measurement and valuation of time devoted to non-market work has become an important—though still marginalized—field of economic research. The gradual success of efforts to conduct representative national surveys of time use has yielded evidence of their relevance to assessments of both the level and distribution of economic well-being. These assessments build upon but also challenge both classical and neoclassical traditions of economic theory. They offer a broader definition of income (and, by implication, consumption) than the standard objective measures, without relying on a theory of utility maximization and subjective satisfaction.

61The next generation of research on the nexus between time, money, and inequality should address the conceptual problems noted earlier: comparability of labor hours, their subjective as well as objective dimensions, and their equivalence across households of different size and composition. Many other problems beyond the scope of this paper also demand creative solutions. Efforts by national statistical agencies to develop improved and standardized time-use surveys could build on previous and ongoing efforts to calibrate national income statistics. The development of social accounting matrices that trace flows of non-market time and intra-family transfers could facilitate better accounting for the services of environmental assets and public investments. Finally, and perhaps most importantly, such accounting efforts could motivate the development of new models of economic dynamics on both the micro- and macro-economic level.

We would like to thank the anonymous referees for their useful comments.

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Notes

1 By some accounts, Marx intended to emphasize the average, rather than minimum, number of hours required. This distinction, while interesting, is not directly relevant to our concerns in this paper.

2 In general, Kuznets argued against valuation of non-market work. It has been claimed that he later came to favor valuation, and parted ways with the U.S. Department of Commerce over the issue. See, for instance, the Encyclopedia of Economics at http://www.econlib.org/library/Enc/bios/Kuznets.html, accessed February 9, 2015. This claim is repeated in Patricia Cohen’s New York Times article, “Putting a Price on Simon Kuznet’s Nobel in Economics,” at http://www.nytimes.com/2015/02/25/business/putting-a-price-on-simon-kuznetss-nobel-in-economics.html. However, we have been unable to locate any primary source that substantiates this claim and therefore remain skeptical of it.

3 This theoretical distinction is discussed in more detail in Abraham and Mackie, 1995.

4 For more on the U. N. program, see http://unstats.un.org/unsd/envaccounting/seea.asp; for more on the World Bank program, https://www.wavespartnership.org/en.

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List of illustrations

Title Figure 1. The growth of official national time-use surveys 1930-2015
Credits Sources: U.N Statistical Office, http://unstats.un.org/​unsd/​demographic/​sconcerns/​tuse/​tu3.aspx; and Oxford University Centre for Time Use Research, http://www.timeuse.org/​mtus/​surveys. Both websites accessed January 25, 2016.
URL http://oeconomia.revues.org/docannexe/image/2543/img-1.jpg
File image/jpeg, 8.0k
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References

Bibliographical reference

Jooyeoun Suh and Nancy Folbre, « Time, Money, and Inequality  », Œconomia, 7-1 | 2017, 3-24.

Electronic reference

Jooyeoun Suh and Nancy Folbre, « Time, Money, and Inequality  », Œconomia [Online], 7-1 | 2017, Online since 01 March 2017, connection on 28 May 2017. URL : http://oeconomia.revues.org/2543 ; DOI : 10.4000/oeconomia.2543

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About the authors

Jooyeoun Suh

Center for Time use Research, University of Oxford, jooyeoun.suh@sociology.ox.ac.uk

Nancy Folbre

Department of Economics, University of Massachusetts Amherst, folbre@econs.umass.edu

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Copyright

Licence Creative Commons
Les contenus d’Œconomia sont mis à disposition selon les termes de la Licence Creative Commons Attribution - Pas d'Utilisation Commerciale - Pas de Modification 4.0 International.

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