In most OECD countries leisure time has been increasing
Digitalization is causing relative price changes in terms of time as well as money and could lead not only to shifts in expenditure and consumption patterns but also to changes at the work/leisure/home production margins:
- More time may be spent taking and looking at smartphone photos, at negligible cost, and less on dining out; there is less home cooking and more ordering food though delivery apps.
As a result, Coyle and Nakamura discuss an alternative approach to economic progress, which combines an extended utility framework considering time allocation over paid work, household work, leisure, and consumption with measures of objective or subjective well-being while engaging in different activities. Developing this wider economic welfare measure would require the collection of time use statistics as well as well-being data and direct survey evidence, such as the willingness to pay for leisure time.
Toward a Framework for Time Use, Welfare, and Household Centric Economic Measurement
Authors: Diane Coyle, Leonard Nakamura
From:University of Cambridge, Federal Reserve Bank of Philadelphia
Leisure productivity has been increasing as well: what are the welfare gains?
Boerma and Karabarbounis take Coyle and Nakamura’s suggestion a step further by developing a model with incomplete asset markets and household heterogeneity in market and home technologies and preferences. Using micro data on expenditures and time use, they identify the sources of heterogeneity across households and document how these sources have changed over time. They conclude:
Our most important finding is to document the substantial increase of leisure productivity over time. This follows from the observation that, for the average household, leisure expenditures relative to leisure time increases dramatically more than predicted from the decline in the relative price of leisure goods. We demonstrate that the increasing productivity of leisure time is associated with significant welfare gains. The increase in mean productivity of leisure time generates significantly larger gains in terms of mean consumption than the increase in mean wages. Additionally, the increase in mean leisure productivity induces significant welfare gains by lowering the dispersion of consumption across households.
Labor Market Trends and the Changing Value of Time
Authors: Job Boerma, Loukas Karabarbounis
From: Federal Reserve Bank of Minneapolis
