Tuesday, February 21, 2017

Household Production and Economic Growth

One problem with trying to estimate long-term economic growth is that our statistics measure only part of what people do:
In the past (say before 1950), labor force participation was quite low (relative to today) by virtue of large family sizes and most married women not working. However, when they were at-home, these married women produced something. That something was simply not included in our national accounts. When they entered the labor force, they produced less of that something. However, since it had never been measured, we never subtracted that something from the actual output generated from their increased participation.
I think this is an important point. The homemakers of my youth were considered unemployed by the government, but they made all kinds of stuff. Besides cooking and cleaning they sewed clothes, raised vegetables, tended sick children, and more. Consider: if you clean your own house, that doesn't show up in economic statistics, but hiring a maid does. Nothing is being produced that wasn't there before, but the GDP has grown. Plus recent economic growth has been accompanied by millions of people leaving the countryside for the cities, and city people have fewer opportunities for off-the-books production like gardening and home canning.

Economist Vincent Geloso finds that accounting for the loss of household production reduces 19th- and 20th-century economic growth by a substantial amount. But his numbers are just guesses, no matter how much effort people put into them; we just don't have any rigorous way to value things for which people don't get paid. Geloso thinks this is important because if you make that correction the "glorious decades" of postwar economic growth are less glorious, and the slow growth of our own period less strange.

1 comment:

aunteater said...

As others have pointed out, a similar non-accounting happens when people talk about "green energy". If you use PV solar power (or wind, or hydroelectric) from your local utility to run your clothes-dryer, that counts toward the percentage of "green energy" being used. If you use solar energy to dry your clothes by hanging them out on the clothesline, that doesn't show up in the energy statistics at all.

We had already reached the conclusion at our home that-- even though we are clawing by on a shoestring budget-- I am far more valuable at home. The costs imposed on my family by my rejoining the workforce would be partially count-able in the GDP, but would totally outweigh my potential income.

What is the real cost of a higher GDP? Is there any way to measure the cost, to children, of low-quality daycare (because most of us can't afford the bilingual, STEM-centered Montessori daycare with all the nice hygienic child-development-specialists, but most of us CAN provide a decent toddlerhood for our own kids, given the chance)? What is the cost, to Americans' health, of not having time to cook? When you consider that poor food contributes to a lot of expensive chronic health problems in the US, you've got a multiplier effect: more wage-work leads to paying more for food leads to paying more for health care. Which suggests a significant boost in GDP at the expense of a significant decline in quality of life. What is the cost-- the real cost, the human cost-- of having to warehouse your aging parents in a horrible-smelling nursing home where they are lonely and bored for years on end, because nobody is available to care for them at home, and their suburban neighborhood is so empty during the day that nobody would notice if they wandered off? Is there a scale big enough to measure those costs?