I’m a very occasional participant in a weekly lunch group of UCLA economists, mostly more conservative than I am, and I look forward to Jack Hirshleifer’s emails recounting the week’s discussion. I was brought up short by the following sentence in the latest set of notes:
… we discussed the loss of the work ethic in Europe. Americans work ~2100 hours, Swiss 1900, Germans 1450 !!
That led me to ask why a strong “work ethic” as reflected in hours worked — long workweeks, short vacations, and long worklives — ought to be regarded as desirable. (A strong “work ethic” in the sense of being diligent at one’s work is a different matter.)
A poor person who desires to become non-poor is obviously better off if he or she is willing to work hard. If the choice is between working hard and not having enough food to feed you kids, the ethical choice is pretty clear. And a poor community or a poor country no doubt benefits if the average “work ethic” among its members is strong, since working hard (or not) is to some extent a matter of custom and because escaping from poverty is harder the poorer the people around you are.
But why should it be considered desirable for the people who live in the richest country in the world to have less time to devote to themselves, their families, and their communities in return for having more material goods? If everyone in the top three-fifths of the U.S. income distribution worked 10% fewer hours and had 10% less income, wouldn’t that make the overwhelming majority of them healthier, happier, and better parents and neighbors? (Yes, some of us get intense satisfaction from our work and believe that it does important good in the world; I’m thinking about the other 95% of the population.)
The evidence from the happiness surveys strongly suggests that, in the words of the Citibank billboard, “Money only rents happiness.” An increase in income tends to make someone happier, and a decrease to make someone less happy. Being higher in the income distribution is correlated with being happier. But over time, as whole countries get richer they don’t get noticeably happier (once they’re at a level above about half of current US GDP/capita), and the correlation between average income and average happiness across countries (again, omitting those who are actually poor) is close to zero.
The structure of our labor markets makes it hard for precisely those people who could afford to make that trade to arrange to make it. And the value of visible consumption in the competition for social status makes earning 10% less than your brother-in-law a costly proposition. But the better bottle of wine that makes you happy today will, if you keep drinking it, seem an ordinary bottle a year from now, and that “hedonic treadmill” effect, by which pleasures are converted into comforts, is hard to escape.
(Robert Frank and Phil Cook’s The Winner-Take-All Society makes the labor-market argument; Frank’s Luxury Fever updates Veblen with reference to market signaling; Tibor Scitovksy’s The Joyless Economy argues that acclimation makes trying to get happier by consuming more mostly futile.)
What, if any, policy measures we ought to take to deal with those issues is a tricky question; perhaps any cures available through public policy would be worse than the disease.
But if the Germans have figured out a way to take an extra 600 hours a year to live, as opposed to making a living, why should we be shocked, rather than merely envious?
And while I’m at it, could someone explain to me why a nigher national savings rate is considered desirable? I can see why it would be better if more people had wealth as opposed to living paycheck-to-paycheck, but given the secular increase in income and the law of diminishing marginal returns, why should we think it desirable to consume less today in order to be able to consume still more tomorrow?
Two generations ago, in “Economic Prospects for our Grandchildren,” Keynes pointed out that hard work and thrift are the virtues of the poor, and that the increasing prosperity he correctly foresaw would make them increasingly obsolete, with the human problem shifting from how to make a living to “to live wisely and agreeably and well.” He was right. But neither the discipline of economics nor our political process has caught on yet.
1. Yes, we could use some of that extra income to help the poor, here and abroad. But we don’t. In fact policies designed around keeping the GPD growing as fast as possible get in the way of policies designed to redistribute income at home and relieve crushing poverty abroad.
2. Yes, there are some forms of increased wealth that, even from current levels, would lead to better lives: better medicine, better education, cleaner air, tap water fit to drink, shorter commutes, less noise, better design. I’m not claiming there’s no tradeoff at all. If most of the marginal income dollar went to such goods, then maybe it wouldn’t be true that trading 10% fewer hours for 10% less income would leave people better off. But between the process of acclimation and the process of competitive consumption, the benefit in happiness or quality of life of marginal dollar spent on routine consumer goods by the non-poor is too close to zero to justify the effort required.
3. Yes, over time people may figure out better ways of converting income into well-being. But don’t hold your breath.
4. Yes, many people can’t fill the leisure they now have with anything they actually enjoy. That’s what keeps the networks and cable companies in business. Perhaps that would be less true if we didn’t think about our educational system primarily in terms of preparing people for the workforce.