by Tyler Cowen
on March 21, 2017 at 2:54 am
in Data Source, Economics, History
The value of household services was equal to about 37% of GDP in 1965, but is currently equal to about 23% of GDP.
That is from Timothy Taylor.
No, this is an average is over story – the vast amount of time spent by Americans filling social networks like Facebook, Twitter, Youtube, etc. with data is providing a vast boon to those dedicated to enhancing America’s prowess in software. Yet this is not included in such a comparison, though much of that data entry is done at home.
Further, of this list – ‘housework, cooking, odd jobs, gardening, shopping, child care, and domestic travel” it is fair to point out that Amazon has displaced a significant amount of time spent in actually shopping, that child care has become considerably more market oriented with the distinct decline of mothers that stay home from work, and that cooking has also become considerably less important, particularly if one is complacent enough to dismiss popping a prepared plastic container of product into a microwave for warming before human consumption as cooking. Even declining domestic travel, to the extent that many American workers are no longer subject to the union contract based burden of 10 paid vacation days per year, is not precisely a surprise.
Odd jobs is certainly harder to quantify – electronics has become so entwined with many objects (think automobiles or appliances) that home repair has become rare, while maintenance in general has been replaced by an attitude of simply buying something new to replace what no longer works properly.
Cooking delicious and nutritious meals at home has never been simpler or cheaper. Buy an instant pot and/or sous vide. Shop at Aldi. Load up on fish sauce and siracha.
We have a fundamental disagreement in the meaning of the verb “To cook”.
Regards from Italy.
Italy’s standing in global cuisine has fallen precipitously for this very reason. By and large Italians refuse to adapt to modernist innovations, most of which represent substantial improvements over traditional methods.
Take a simple example. The best way to make risotto is in a rice cooker. Hands down. The heat’s applied far more evenly than even the most talented stovetop cook could do. Plus it’s a waste to have to stand over the pot constantly stirring. But try telling this to any Italian, and they’ll wave their hands at you yelling about how this just isn’t right.
Even in coffee, where Italy has always been the undisputed king, things have fallen way behind. Italian coffee no longer ranks even in the top five in the world. Maybe not even top 10. It’s doubtful if an Italian will ever win the World Barista Championship from this point forward. C’mon guys, everybody knows grinders should be doserless. Quit being stuck in the past.
You mean the 40 minutes idling over the pan and around kitchen sipping on a red and sharing in conversation with friends?
Can’t you do that without constantly stirring and ruining your risotto?
This month I just repaired one of my freezers (evaporator fan and motor), my clothes washer (drain pump), reflashed my truck’s engine code, installed a new hard drive, in my computer. There are plenty of my neighbors that can do similar tasks. If you’re not fixing perfectly usable items you have too much money, or are lazy, or both.
They didn’t have Youtube videos, internet forums, and appliancepartspro.com and the like back in the ’60s. There is so much more I can fix these days because helpful folks have posted videos on Youtube as to how to do them.
Amazon helps save a tremendous amount of time. No longer do you have to waste time going store to store looking for something.
+1, to YouTube videos. Their my go to source for almost any repair. In the past I would have been calling my dad, uncles or grandfather and trying to make do with the knowledge they possessed. Which is rather large, but still limited to about 10 men. Now, I’ve got the entire internet to draw from. I can generally watch 2-3 videos to diagnose the problem and to see what parts I need. Order them off of Amazon with free 2 day shipping. And them perform the repair in a couple of days, watching the most relevant videos. I’ll often view the first few minutes of several more and pick the most helpful one to walk through the repair.
Precisely Mr. Engineer. I changed a faulty CPU fan and battery in my laptop, regularly modify my desktop computer, changed the battery of my smartphone , did the oil change of my bike’s front suspension………besides repairing and avoiding buying new stuff, I’m not sure how may therapy sessions I’ve avoided too.
Repair videos on youtube videos are great and cooking videos too.
Lots of links and discussion concerning this very subject here – http://www.metafilter.com/165796/Lifetime-Not-Guaranteed
In some ways it is easier to repair things at home than it was in 1967, in that it’s usually easy to locate specialized parts on the Internet, and often one can find some very specific how-to instructions there as well.
Nonetheless, if the cost to replace the appliance, lawnmower, etc. has gone down then presumably the economic value of the repair will have decreased as well. It’s hard to believe that there was once a time when repair shops would fix small appliances such as toasters and clothes irons because they are now so inexpensive as to be disposable. Also, the replacement may be better than what you now have (a new freezer may use significantly less electricity than the old one; the lawn mower may have safety features the old one lacks, etc.).
It’s true that serviceability was once designed into many products and now often is not, but, that probably reflects that most consumers would prefer to own machines that seldom if ever need repair rather than one that is (relatively) easy to repair if/when repairs are needed.
Many products are not worth the cost of a home repair.
If it takes you an hour to fix a toaster over that costs $60, you’re losing money if you get paid more than $60 an hour.
Unless you just like fixing things for FUN, in which case that counts as leisure.
Not many people make over 60$ per hour.
That’s true, but that was a terrible example.
Walmart sells a standard toaster for $7.44
If you’re not fixing perfectly usable items you have too much money, or are lazy, or both.
Well, bully for you.
Over a period of more than 30 years, I’ve never had to repair my refigerator or clothes washer and I have the sense not to noodle around with equipment with which I’m not familiar. Some of us have the sense to buy appliances which are low maintenance. As for vehicles, they’ve got too much computer controlled equipment in them for amateurs to mess about with; I know a lapsed auto mechanic who won’t touch his vehicle because he simply is not familiar with much that you find in automobiles nowadays. I think the worst year I ever had in the realm of auto repair bills (aside from two bouts of collision work covered by insurance) cost me about $1,000. We buy used in our house, exchanging one every 5 years or so, if that.
” As for vehicles, they’ve got too much computer controlled equipment in them for amateurs to mess about with”
That’s not true. You don’t need to know anything about computer controlled equipment to change the tires, brakes, oil, A/C coolant, air filters, transmission fluid or to rotate the tires. I’m not saying that it’s wrong to have some one do it for you. (I don’t want to spend the time doing it myself anymore either.) But almost anyone with basic tool knowledge can still handle the basic maintenance on a standard car.
“We buy used in our house, exchanging one every 5 years or so, if that.”
Agreed, that’s what we do. Buy a used car (that has high reliability ratings) that’s 2-4 years old, and drive it for 4-6 years. Bank the money saved into retirement savings funds.
The last vendor who rotated my tires had a bevy of equipment I’ll never own. I’ll stick to changing tires on the highway, provided the spare isn’t flat (which it usually is). My last car repair bill was for $67. Somehow, I don’t think I’m in the affluenza zone because I have $67 in cash.
“Odd jobs is certainly harder to quantify – electronics has become so entwined with many objects (think automobiles or appliances) that home repair has become rare, while maintenance in general has been replaced by an attitude of simply buying something new to replace what no longer works properly”
Would need to go find it but I came across a website devoted to exactly this problem — and show people what they could do to fix things rather than throwing them away and buying another (often piece of junk that will break too soon as well). A lot of good DIY youtube things about how to convert tossed out devices into other useful one — iike converting a microwave transformer into a nice spot welder.
So, washing dishes by hand is better that buying a machine that does the same? The purpose of home appliances is to reduce time spent on housework.
It goes beyond that – buying a dishwasher, not to mention the electricity it uses, shows up in the official GDP figures, thus decreasing that household share even further.
Or hiring a gardener while you go to the gym.
My take as well, that increased leisure is being reported as stagnation.
Speaking of gardening is it just me or is anyone else here turned on by lawn gnomes?
I don’t have the time right now, but could someone post the faux Art Deco’s ip address? I’d like to learn more about him.
That increased leisure is stagnation is actually one of the main points of The Complacent Class, and of Cowen’s philosophy at large, see the frequent tirades on video-gaming.
I never put a Thai lunch in the same category as video games, but I suppose it is.
in undeveloped countries where most of the people are subsistence farmers house hold production would be a very high percentage of GDP, so I would see a shrinking percentage as a good thing even if not counting it makes us over estimates the growth rate by 14% over 60 years.
I agree. How is this bad?
The fact that household services represent an increasingly smaller share of GDP means that GDP is relatively larger. If we add that household size is smaller now than back then (and that therefore there are more households), one can assume that household services have increased in absolute terms from back then, which means that their relative fall with respect to GDP is even more impressive
Household production seems like an impossible measure, it is the place you go when you don’t want to measure anything. House do you separate household leisure from household production?
Household production mostly lies outside the market economy, which surely makes it difficult to assess its economic value.
A home-cooked meal may be better nutritionally than a microwaveable package and it may taste better as well, but how does one assess its value? Especially if the cook considers cooking to be as much a hobby as a means to produce prepared food, and perhaps buys absurdly costly tools with which to prepare it?
Small household repair jobs (e.g., leaky toilet, replacement of worn-out floowing) seem to have high transaction costs. I need to spend time finding someone who can and will do the work to a quality standard beyond “it’s good enough, let’s go home and then inspect the work when it’s done. Those who do it need to schedule a small job in a way that uses their time efficiently, plus assorted business expenses such as advertising. And (of course) government adds transaction costs because I must use after-tax money to pay for the labor and the recipient receives taxable income whereas DIY labor is not taxed.
DIY labor productivity seems low. My own experience is that I can do home repair jobs at least as well as a pro, but, it takes me three to four times as long to do the work. That’s hardly surprising as I seldom do these tasks, while someone who does them every day can be expected to get very good at it. Even so, transaction costs are high enough so that it’s often easy to make a case for DIY.
So, perhaps household production (other than household crafts which are sold outside the household) is the last frontier of economists; it surely has value, yet how does one quanitfy the economic value of labor that is not bought and sold?
” My own experience is that I can do home repair jobs at least as well as a pro, but, it takes me three to four times as long to do the work. That’s hardly surprising as I seldom do these tasks, while someone who does them every day can be expected to get very good at it”
A professional will be faster, but the additional speed only matters for substantial repairs. The professional has travel costs and dead time to cover. Probably a couple of hours worth per job. So, unless it’s at least half a day, the total time spent is going to be a wash.
A new happiness report is out. What that leisure buys us? Or what too much commerce and not enough home cooking does?
The point is, money can not buy you happiness. In the great happiness international competition, Brazil achieved one of the biggest happiness: GDP per capita ratios mankind has ever seen. Family, neighbours, friends, the sun, the sea breeze, the twilight, they are all free for the taking.
President Temer has acted swiftly and mercilessly against the meat bandits even after finding out some of them have links with his own party, PMDB. The corrupt acts took place in a few industrial plants in a few states. A federal investigation, the biggest in Brazilian history, is ongoing. Dozens of people were arrested or fired, tons of files have been confiscated. Most meat is not poisoned, almost all food supervisors are honest. Part of the tainted meat may have been bought for the school lunches programme of one Southern state – children have already been warned to not eat rotten food – measures are being taken to replace the unsuitable food as soon as possible, no one will starve. President Temer has eaten Brazilian meat publicly with foreign ambassadors to prove them and everyome else that everything is under tight control. South Korea has already reverted its Brazilian chicken ban. All in all, it was a Brazilian triumph, we, as a people, proved to be decisive, deft and public-minded (can anyone imagine an American president punishing people from his own party?). The population at large has being told in no uncertain terms about the situation (this is a difference between the USA and Brazil: transparency, no CIAs, no NSAs, no Deep State) and advised to keep calm and be careful about the food it is buying.
It seems like China and the EU putting a temporary ban on meat imports from Brazil is a pretty substantial issue. Particularly, because this isn’t an accidental issue, but due to deliberate corruption and fraud.
As I said, the corrupt actions took place at a few places in few states. Most meat is great. The bans will probably be suspended before anyone even notices. Harsh punishments, a deep investigation and new stringent supervision measures have been announced. Some companies had their exporting licenses revoked. Brazil already submits itself to our trade partners’ supervision and it is unlikely any unsuitable meat has ever been exported. China and the EU have asked for more information – the Agriculture Minister has promissed to share all new intelligence with our partners. South Korea has already reversed itself on the ban. Major buyers like Japan and Saudi Arabia seem to have been convinced by President Temer’s bold leadership. The fundamentals of Brazil’s meat industry are strong and the general state of our federation is good. Brazil is the second biggest meat exporter, the first bovine meat exporter and the biggest protein exporter company is Brazilian. Those are the facts and they will soon trump hysteria and anti-Brazilian propaganda.
You’re like the Kellyanne Conway of Brazil.
Everything is great and getting better!
There were some rough patches for sure, but nothing that demanded desperate measures to make Brazil great again. The current meat crisis is being defeated by President Temer’s correct leadership. Truth is, every day, in every way, Brazil is getting better and better.
“See what skies! what rivers! forests! and what sea!
Nature celebrating, here, perpetually,
A mother’s bosom overflowing warmth and love.
See what life upon the ground! in nests above,
Which sway among the moving branches in the air!
See what light, what heat, what clouds of insects there!
See the great expanse of jungle that presides
Where fertile, luminous, eternal spring resides!” Olavo Bilac, Brazilian poet (1865-1918)
The SSDN doesn’t bother to ask people if they’re happy. It makes other measurements, puts them in a formula and call the result “happiness”.
I believe they are using self-reported life satisfaction and comparing that to “models” which have a more (as you say) subjective style. They work with self-reports, and then up and blame “Citizens United” for a decline in American happiness.
I’m open to similar work from a right perspective, to took at those global self-reports of happiness, and give their reason why the Nordics score so well.
I am not seeing why this is bad. First the reference point–37% applies to 1967; the number for 2008 is 26%. If the economy grows slightly faster than the adult population and the “household services” does not change per person, then one would expect the percentage devoted to household services to go down. Furthermore if people replace household services with hired help or machines and have more time to spend on education, leisure, and community activities, the percentage would fall and that would be beneficial
There is a class of people out there who would prefer to see ditches dug by two dozen coolies with picks and shovels than one high school grad with a backhoe.
And if you sent any of them back in time to 1967, you’d be able to hear their whining through the space-time continuum. Also, they’d be dead in four months.
Surely it’s best for government to pay to have the holes dug and then pay again to have the holes filled in? Think of the GDP increase!
But doesn’t this also cast doubt on the stagnation hypothesis? That is, if people have really become no better off, then why are they hiring out more services rather than performing them themselves? Alternately, I suppose you could argue that household production work has grown less labor intensive, (online shopping, online bill payment) — but household tasks becoming less time consuming would also run counter to the stagnation hypothesis.
Mid-century housecleaning standards were extremely high due to the danger of dying of infections in unclean houses. But then antibiotics came along in 1945, along with lots of new appliances and household cleansers, so our average standards declined slowly declined as we realized that we could many fewer hours of chores and still not died suddenly.
It works until the superbugs start hatching.
People in the past were so rational, or “cleanliness is next to godliness” was dogma.
Mutually reinforcing precepts. The strength of the sanctity-degradation axis is controlled by the strength of the disgust mechanism which is determined by exposure to pathogens. As the environment has gotten cleaner and less germ-ridden, people have gotten less godly.
“People in the past were so rational, or “cleanliness is next to godliness” was dogma.”
Household sanitation was directly related to health before 1950 (and probably as late as 1960 for the deep south). It seems odd to call a behavior that was directly helpful a dogma.
“Household sanitation was directly related to health before 1950”
Correlation or causation? I’d expect just correlation except, possibly, when it came to food storage and handling,
“Correlation or causation? I’d expect just correlation except, possibly, when it came to food storage and handling,”
I would imagine food storage and handling are primary, but other areas that were common would be:
Poorly kept Dirt floors (common in various spots of the country till the 1950’s. (Ring worm, etc)
Farms with a lot of manure and dirt tracked in, even with improved flooring (Even worse, trichinosis, etc)
Insect, spider, lice and mite bites (common from not regularly washing bodies, clothing and bedding)
There’s housework which promotes sanitation is a subset of housework in general. My mother could tell you somethings about daily life ca. 1940 among comparatively affluent people. They lived for 7 years in a house infested with rats. You didn’t often see the rats, but you could hear them. You had a coal furnace, which your father stoked in the middle of the night. Not very clean. ‘Clean clothes’ was an understanding dependent on the time you had to clean them, and even with mechanical washing machines, it was a headache in a way it wasn’t thirty years later. There were some consequential sanitation measures her parents followed: (1) getting in a swimming pool was verboten; and (2) you segregated your children when one fell ill (and whooping cough was something you were extra careful with. This was not daily life, though.
There’s a fairly well-supported theory their that we may be too clean and sanitary, with the result that our bored immune systems attack our own bodies. Especially in childhood, getting good and dirty occasionally may be a good thing.
Or perhaps work just expands to fill the time available to do it?
Must the Age of Antibiotics inevitably come to an and? The “low hanging fruits” of antibiotics seem to have been harvested and defeated by pathogens’ evolution, making it ever more difficult and costly to develop new ones. Is this not a war the bugs are destined to win?
If the Age of Antibiotics does become just a memory, there surely are many behaviors that surely will change (in medicine and in the community) to accommodate the what’s-old-is-new-again risks of infectious disease.
“Must the Age of Antibiotics inevitably come to an and? ”
No. We have billions of dollars to spend on new Anti-biotics, phages, etc.
Dump a bunch of antibiotic resistant bacteria into the wild and they’ll lose it as it is disadvantageous where antibiotics are not being applied.
Is this not a war the bugs are destined to win?.
A.C. Clarke has a great short story on just this topic.
“Is this not a war the bugs are destined to win?.”
Penicillin wasn’t created, it was discovered. The bugs have been trying to beat antibiotics for billions of years. They may well win, but it probably won’t be tomorrow.
Mid-century housecleaning standards were extremely high due to the danger of dying of infections in unclean houses.
That might explain the effort people put into having clean sheets and clean kitchens and clean bathrooms, not any other aspect of housework. My grandmother was the echt midcentury housewife.She didn’t give a rip about dust. Laundry was done once a week in an outdoor machine.
Also. If people acquire labor-saving appliances (dishwashers, clothes washers and dryers, microwave ovens) as they have since 1965 and also labor-saving goods (no-iron clothing) — this will look like stagnation if you’re measuring GDP. The purchase of labor savings goods is a one-time event, so the positive effect on measured GDP is muted, but all the labor hours disappear from household production and it appears (erroneously) that we have grown poorer and progress has stagnated when the opposite is true.
The problem is entirely due to the measurement mechanism. They use a survey of household hours worked and multiply by average wage rates. That’s fine for any part of the economy whose outputs’ cost trends are captured in inflation rates since productivity growth will lead to lower costs over time assuming no inflation. And there have been huge improvements in household productivity. So you have to be able to measure the quality and quantity of outputs of this sector if you want to correctly assess how total production (GDP + household productivity in this case) has changed over time. The method used does not support Tyler’s conclusion.
Work harder, not smarter.
It’s even more stagnant than you realize: the value of everything was worth 100% of GDP in 1965, and it’s still only worth 100% today!
Haha we have a winner!
Not buying these numbers for either era. The BLS data indicates that per capita time allocation to household chores and grocery shopping is 2 hours per person per day. They also report that personal care aides are paid about $10.50 an hour. That will sum to 13% of gdp. This has to be driven by shizzy valuations of childcare services.
“The volume of services rendered by housewives and other members of the household toward the satisfaction of wants..”
In 1960, 35.9% of the population was under 18.
In 1970, 34.3% of the population was under 18.
In 2010, 24.0% of the population was under 18.
Nice explanation of the excerpt.
Looking at the article, I still think men (especially unemployed men) need to perform more housework. As other commenters indicated, online resources have made DIY easier ( I’m still terrible at plumbing).
“I’m still terrible at plumbing”
Even with PVC? PVC has made plumbing so much quicker and easier that union plumbers in Chicago and their politician buddies spent many years fighting it:
Sharkbite fittings are even easier than PVC. No glue.
I think Tyler is joking.
You could as easily say “The value of non-household services has increased from 63% to 77% of GDP”
Why on earth would we want “household services” to become a larger percentage of the economy?
I guess for the same reason Trump says that he wants blue collar labor to become a larger percentage.
Tyler’s thinks housewives need more work?
“I guess for the same reason Trump says that he wants blue collar labor to become a larger percentage.”
Trump says he want to get unemployed blue collar laborers jobs. That doesn’t seem applicable to household work.
Well, if we remove all those kitchen aids brought in during the ’60’s, like dishwashers and microwaves, housewives/keepers will have more work.
Way to miss the point. Household production is not counted in gdp.
But housework is a job. Let’s make it harder and longer and put more housekeepers to work!
“But housework is a job. Let’s make it harder and longer and put more housekeepers to work!”
Don’t think that’s Tyler’s point. Work on your reading comprehension.
Sorry. I was just reaching out a bit into the current real world.
Some of “GDP growth” over time can be attributed to moving unmeasured household production outside the home, where it is then measured. At least this is what I (and others) have argued.
So I take Tyler’s point to be, to the extent this argument is correct, that a great deal of household production has in fact been moved out into the market, where it is incorporated into GDP statistics. Which suggests that “super-real GDP growth” (my new term for inflation-adjusted GDP growth that fully incorporates household production) has been significantly less than the headline growth figure since the 1960s.
Alternatively, Tyler means not that household production has moved outside the home, but that “household production” has been completely stagnant over this same time period (and it became a smaller portion of GDP because non-household-production GDP increased substantially). So that if we look at super-real GDP, it again has not grown so fast as measured GDP, meaning total growth has been at a lower rate than we thought.
Actually I think this is what Tyler means.
The trouble with that thesis is that the share of gross output and value-added accounted for by the restaurant business hasn’t changed much in the last 60 years. Appliance repair generally accounts for quite small shares of household budgets. Commercial childcare is also a small fraction of the economy (< 1% of the labor force is employed in that business).
Public childcare (primarily in the form of primary and secondary schooling) seems to have become more expansive and expensive though.
On second thought I decided Tyler wasn’t actually intending to support my theory, but meant it in the way I said in my reply to myself.
I won’t claim that a move from unmeasured household production to measured outside-the-home production explains a substantial chunk of measured economic growth. I will just make the weak claim that this move has some non-zero effect on measured GDP growth, and that to the extent it does, it is mostly illusory. But perhaps it is only a few hundredths of a percent of GDP, if that, in which case it isn’t particularly important.
As a share of GDP? Don’t think so.
Yeah, you’re right, I forgot to consider the obvious point I had already posted above: the school-aged population is a much smaller portion of the population now than it was in the 1960s and 1970s.
I looked briefly and the best over-time number I could find was that spending on primary+secondary education in the U.S. was less than 1% of GNP in 1890, and was 3.4% in 1990, but had peaked at 3.9% in 1975.
1) the metric being calculated is the value of home service / GDP. The denominator has been increasing.
2) there is reason to suspect that the value of home production has a rather hard cap. Clothes can only be so clean.
3) the value of home services is a function of the number of people in the home. Household sizes have been decreasing.
Valuing childcare services is also a vexed question.
I like your number 2.
There is only so much household production to be done. Once you are done with the laundry and the cooking and the cleaning (hopefully as quickly as possible), you get to spend your time and money doing other non-household things.
Big data point: the previous post by TC, an important study about Chinese imports affecting the rate of US innovation, gets 35 replies. This trivial factoid by Timothy Taylor, not even peer-reviewed and not even that interesting except as trivia, gets over 73 replies.
Shows me how the public has no clue about what drives the economy. If you ask them what the “Solow Model” is, I bet one in one hundred would even know, and even among economics majors I bet one-fourth would probably not even recognize it.
Comments on this entry are closed.
Previous post: Did Chinese import competition lower American innovativeness?
Next post: New MRU video on American stasis
Email Tyler Cowen
Follow Tyler on Twitter
Email Alex Tabarrok
Follow Alex on Twitter
Subscribe in a reader
Follow Us on Twitter
Marginal Revolution on Twitter Counter.com
Get smart with the Thesis WordPress Theme from DIYthemes.