Who Likes Leisure?

A little bit late perhaps but I want to recommend two articles that you might find interesting. The first is "Why do Europeans Work so Little?" by Conny Olovsson and the second is "Tax Effects on Work Activity, Industry Mix and Shadow Economy Size: Evidence from Rich-Country Comparisons" by Magnus Henrekson and Steven Davis.

How do you determine "objectively" how people would trade off labour for leisure? In the US now, the problem probably is that you have to keep working to keep up with the neighbours, not because you really like the benefits of working.

Consider how it all started: the original industrialists had trouble getting folks to work once the folks had acquired as much as they were used to. After that, they valued leisure.

According to an anonymous 1821 pampleteer:

After all their idle sophistry, there is, thank God! no means of adding to the wealth of a nation but by adding to the facilities of living: so that wealth is liberty -- liberty to seek recreation -- liberty to enjoy life -- liberty to improve the mind: it is disposable time, and nothing more.

The pamphlet was titled "The Source and Remedy of the National Difficulties as Deduced from Principles of Political Economy in a Letter to Lord John Russsell." Although the pamphlet was published anonymously, the author is believed to be Charles Wentworth Dilke, a literary critic, edior, friend of John Keats and disciple of William Godwin and his Political Justice.

A link to a pdf file of the pamphlet is in my URL.

Probably lots of factors play in. How about this one: Americans tend to have more kids than Europeans. Kids are expensive, and I'll bet they're more expensive in America than in Europe. Good reason to go to work.

People consume much more work than leasure if offered both not because they really want the money, but the "winner take all" nature of corporate success. They want the good assignments and to beat others. This is a zero-sum game and so encouraging it is worthless. Income is only correlated with happiness as a cross-section of the population at a point in time, not for generational increases in income.

Matt -- the libertarian think-tanks are way ahead of you. As Scotty observes, the linkage between health insurance and employment is an artifact of the tax code, which itself resulted from WW2-era wage and price controls. The simple solution would be to change the tax code to eliminate the tax break for employer-provided health insurance. But that's probably out of the question politically, so the next best solution is to expand the tax break so that it applies to *any* health expenditure (not just health insurance) and can be experienced by anyone (not just people employed by companies large enough to offer it). Health Savings Accounts (HSAs) are a libertarian proposal for doing just that, and they are now legal -- one of the very few saving graces of the Bush administration.

From what I recall, isn't employer-linked health care a hold over from WW2 wage controls? Employers couldn't offer raises to employees, so they offered health insurance.

I am about as classically liberal as Friedman, but we HAVE to do something about health care costs. I'm not saying socialize, but some plan to remove artificial barriers for both health care providers and consumers.

Chuck's comment about health care has nailed it. As long as health coverage is linked to full-time employment, workers can't pursue the range of options that they might otherwise, such as freelance or part-time work.

If we can find a way to disengage health insurance from part-time work, the social and economic ramifications will be tremendous. Just imagine the breadth of choices that individuals would come up with if the labor market allowed this kind of flexibility. As a parent of two small kids whose wife is a school administrator/teacher, I know that if I could work part-time and keep health care coverage, it would be utterly fantastic from a domestic standpoint.

Chuck is right- linking health care to employment is a fundamentally illiberal flaw in the market that some intrepid libertarian think tanker ought to find us a way out of.

So, my hypothesis is: europeans don't really appreciate leisure more, they're just taxed too much. If their taxes went down (and hour caps removed), people would start working more. They would complain about terrible Americanization, but they'd still work more. Soon enough, the norms would change, more folks would work more, growth would increase, and they'd do better at funding all those "social justice" programs.

But I'm no economist, sociologist, or simple caveman lawyer. So what's wrong with this story, if anything?

There's nothing wrong with your story, as far as it goes, but I think that you're neglecting the other side of the equation--and that leaves you susceptible to a crude caricature of your position such as the one that Chris Bertram posted on Crooked Timber. (viz., that work is good for its own sake)

Yes, there are distortions in the European system that make them work less than they otherwise would. But I believe that there are also massive distortions in the US system that make us use less leisure than we otherwise would (to our detriment!).

Let me give you the two examples that come to mind: Healthcare and higher education. We have a healthcare system that's tied to private insurance which we get through a third-party (our employer). Why? Because that's the way the tax code is set up (employers pay with pre-tax dollars). So if you lose your job, you lose your healthcare. The bottom line distortion is: Don't become a free-lancer, don't start your own business, just put your nose to the grindstone and keep working for corporate. That sucks.

Higher Education. We have a system that subsidizes consumers. It's okay insofar as it has given us the best higher education system in the world. But it has also relieved universities of the pressure to control cost. So the federal government has been giving and subsidizing greater larger amounts of student aid. Today, student loan burdens are enormous. So you work, work, work at your job to get the hell out from under your Everest-size pile of debt. It's like some weird indentured servitude.

Without distortions like these, more Americans would free-lance, work for themselves, or otherwise use increased leisure time.

And leisure time is good and important! It's important for maintaining family bonds, cultivating one's personality, and maintaining sanity.

So let's not allow the illiberal socialists to equate markets with the destruction of leisure.

It is certain illiberal peculiarities of the American system that have deprived us of our leisure.

My wild guess at the story is that Europeans like to work just as much as anyone else if it pays.

Bzzt. You're wrong. As a British expat in the US, I don't give a toss about the tax burden; I do give a toss about the fact that employers expect me not to take holidays. Even public holidays.

But I'm no economist, sociologist, or simple caveman lawyer.

Really? You could have fooled me.

"If the workers already put a high value on leisure, you'd think they would be sitting around enough even without welfare."

Us freelancers already are. Here I am, on a Tuesday, sitting and idly loafing around the place. I could be at some kind of office job, earning twice to three times the amount I earn now. But I wouldn't be able to spend all my time on the internet and take three holidays a year if I did that, would I?

So "what's wrong with this story" is that it begs the question. The assumed answer to the question in the topic - "who likes leisure?" - is that nobody likes leisure, or that they all prefer money to leisure. The moment you throw this absurd assumption out of the window (and, while we're defenestrating pseudo-intellectual bobbins, we might want to rid ourselves of the idea that the relative harshness of a >$150K tax bracket is in any sense a dissentive to the vast majority of workers in either Europe or America, 50% of whom will earn "

Us freelancers already are. Here I am, on a Tuesday, sitting and idly loafing around the place. I could be at some kind of office job, earning twice to three times the amount I earn now. But I wouldn't be able to spend all my time on the internet and take three holidays a year if I did that, would I?

So "what's wrong with this story" is that it begs the question. The assumed answer to the question in the topic - "who likes leisure?" - is that nobody likes leisure, or that they all prefer money to leisure. The moment you throw this absurd assumption out of the window (and, while we're defenestrating pseudo-intellectual bobbins, we might want to rid ourselves of the idea that the relative harshness of a >$150K tax bracket is in any sense a dissentive to the vast majority of workers in either Europe or America, 50% of whom will earn <~$20K), you have no grounds on which to make the claim that Europeans don't appreciate leisure more than money.

Certainly, at least some Europeans feel that way, and as well as being one I know some of the others. My hypothesis is that the temptation of the economist to reduce the complicated real world down to nice little graphs and "representative actors" has convinced yet another otherwise rational person of a theory that has no practical or sociological relevance to the real world, but which nicely supports their existing prejudices.

Will, the problem with the theory is that you're seperating economic decision making from political.

You're spot on that European attitudes to work are influenced heavily by the welfare state and the way it reduces both the rewards for success and the cost of failure. However, it's also European attitudes which shape and perpetuate the political climate. I think it's a feedback effect between mean individual attitude to risk and the overall political climate which pushes European and American attitudes to work apart, rather than either individual ('they place a higher value on leisure') or political ('they have fewer incentives to work') in isolation.

I've always been sort of confused by the view that a welfare system is more appropriate to a "European style" culture which appreciates leisure more than others do. If the workers already put a high value on leisure, you'd think they would be sitting around enough even without welfare. In that case, you'd think society wouldn't want or need to give them incentive to become even less productive than they already are. On the other hand, it seems to me that a country full of workaholics could easily afford, and might even desire, the increase in leisure-time welfare would incentivize.

As an economist, I can say your story makes perfect sense, and it's exactly what I had assumed to be the case. You can also add in a "pull" story to go with the "push" story: not only did taxes make work less remunerative, but the welfare state also made leisure less unpleasant.

How does your story differ from Prescott's? Did you add the element of working less becoming incorporated into the "national character"?

As a caveman lawyer myself, I find your story pretty compelling.

Look at Cuba. Every damn BoBo I talk to who has been there tells me how happy everyone is. They don't work, they don't eat. They just bone and smoke and talk.

And it's part of the natural character and so forth. And it's so charming. Of course, the relative deprivation hypothesis plays into all this as the government controlled media insulates people from the Joneses.

Ah happiness. Fickle beast.