Thursday, 5 May 2011

The economics of pleasure

The glorious weather has brought with it a surge of reading activity on my part: while keeping half an eye on the cats as they enjoy the garden, I’ve been ripping through books.

One of the most recent tomes to enjoy this treatment was Freakonomics by Steven D Levitt and Stephen J Dubner.

It's economics Jim, but not as we know it.

There is no overarching theme, but some of the questions that are tackled by Levitt (he’s the economist, while Dubner is a journalist) are intriguing to say the least.

For instance, he debunks the idea that the dramatic fall in crime in the US in recent years was primarily down to innovative policing or changes in sentencing (although he does note that increased numbers of police would have been beneficial).

Instead, he reveals a factor that had not come into many discussions before: that of the impact of the legalisation of abortion meaning that just as a generation of youngsters from that era would have been coming into their criminal prime, they were not there.

Such an analysis is fraught with difficulties, since abortion remains such an emotive subject. But Levitt seems to have been thorough in his work.

For instance, prior to Roe v Wade, the case that saw abortion legalised throughout the US, it had been legal in three states for a short period of time. In these states, the same fall in crime is noticeable earlier than in the rest of country but at the same rate that the rest of the country would subsequently see.

Levitt has been accused of many things for this research, from being a racist to being a eugenicist. However, as elsewhere, he merely looks for what is behind the available data – he makes no moral pronouncements. And quite frankly, while the results of his work may not seem palatable to some, it’s knee-jerkery to dismiss them with such accusations.

He’s interesting too on education and parenting. But this is also where one starts to get the feeling that he’s perhaps over stretching himself – or rather, over stretching what economics can show.

On the one hand he uses incredibly detailed data from Chicago to argue that many parental choices and actions have no impact on children, as much of what they will become is already genetically imprinted in them.

Yet elsewhere, he argues that peers have more influence on children than their parents and later, when discussing this in terms of adopted children, he admits that the approach of adoptive parents can change and improve the life outcomes for an adopted child, even if it cannot, for instance, change their basic intelligence.

In other words, his data shows many things, but even he knows that it would be too crude a conclusion to take his findings in isolation.

And in the ‘bonus material’ at the end of the edition that I was reading (newspaper articles) we see again the limitations – even the danger – of trying to view the world in economic terms alone.

In one brief essay, Levitt looks at leisure activities and he asks the question of why someone would pay more to knit their own scarf than to buy one. Included in his estimate of the cost is that of the person’s own labour. But doing that clearly dodges the question of the pleasure and satisfaction that the knitter gains from that creative activity – and indeed, from producing an end result that they can then wear.

"Cooking for fun” (as a survey of US activities put it) confuses him too.

Again taking the labour into account, he reaches the conclusion that it would be far cheaper to simply buy a takeaway or ready meal from the shop.

Now to be fair, there are hints in the piece that Levitt himself knows that life doesn’t work this simply, but he does seem to be trapped into asking questions where he expects – and wants – clear-cut economic answers.

In this brief essay he seems to suggest that everything is reducible to thinking in terms of finance and incentives.

Now in most households, someone has to buy and prepare food.

It might be the act of buying that ready meal, taking it home and then popping it in the microwave before divvying up onto plates, but it still has to be done.

That, of course, can easily be classed as a ‘chore’.

But what if you take greater time because you want to have control over your food and do not believe that highly processed fodder is actually any good for you?

How does that change the economic situation? It’s still a ‘chore’, but how do you assess the motivation and calculate the cost of that? Indeed, how so you economically calculate the impact of a better diet?

The article suggests that, in terms of economic incentives alone, fast food and ready-made meals are the sensible option.

But to take it a stage further, what happens when you do the latter – not just for the reasons briefly listed above, but also because you actually enjoy it; you find it, say, as therapy after a tough day at work?

Does it cease to become a chore and become leisure?

It’s that peculiar dividing line between leisure and non-leisure: as if something, if it is enjoyable, has less of an economic value.

It’s as though we have become suckered into seeing everything in terms of economic productivity – that economic productivity is the most important factor in all our lives, or should be.

Perhaps, in terms of the US and UK, this is the case – not least because there still exists a rather puritanical idea that work is the most important thing in one's life – even above family and certainly above pleasure.

In Stewart Lee Allen’s In the Devil’s Garden, a history of taboo foods, he comments that food culture in the US is now so denuded of pleasure that people scoff their tasteless fodder to get back to work that much quicker. In other words, go back to being productive.

It’s perhaps no coincidence that, in general, people in the UK and US scorn the idea of the French two-hour lunch. It’s culturally viewed as something negative.

But hold on a moment.

A couple of days ago, the Daily Mail published an article boasting that one of Margaret Thatcher's best legacies was that people in the UK work seven hours longer, per week, than we did before she came to power in 1979. And that is at the same time as workers in most of the rest of Europe have seen their own working week shrink.

That's a great boast. Yet it gets 'better'. In fact, in that time, productivity in the UKL has actually fallen.

And if we specifically compare the UK and France, then the French work noticeably fewer hours than we do – but their productivity is higher. Strangely, the Mail didn't actually mention that, but then who would want to boast that people work longer, to less effect?

But given this sort of attitide, it's little wonder that the likes of Levitt struggle with how to deal with “cooking for fun” in economic terms.

It would be interesting to see them actually try to come up with an economic value for the French 'lifestyle' given that basic data, which comes from a pretty reputable source in the OECD.

Levitt has plenty to say that is of interest – it's easy to see why his expertise is in economics and crime – but he might not have intended to show, as effectively as he has, the limitations of economic analysis and the negative impact of a certain type of economic philosophy on UK and US lifestyles.

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