Two Improper Concepts to Measure
By Arnold Kling
1. The value of household production. Timothy Taylor writes,
Get an estimate of hours devoted to home production, and then multiply by the wage that would be paid to domestic labor.
No, no, no!
Suppose I build a deck to add on to my house. Should you measure the value of the deck by multiplying the number of hours I spend on it times the wage rate of a professional carpenter? If the carpenter takes 40 hours and I take 4000 hours, then you want to tell me that my deck is 100 times more valuable?
If I build my own deck because I enjoy it, fine. But then talk about the value of my leisure, not the value of my “home production.”
I think it is really important to understand that home production is not economic activity. Economic activity is outsourcing. It is patterns of sustainable specialization and trade.
Home production is what you do when institutional constraints cause the outsourcing market to fail. You should work an extra hour and pay someone else to do your household tasks, but your employer will not pay you more for working more hours. Or you could be paid more, but there is a tax wedge that makes it cheaper to do your own laundry. Or the transportation costs are too high to have someone drive to your house to open up that frozen dinner and put it in the microwave for you.
2. Happiness. Will Wilkinson writes,
I think our normative theories of happiness — our implicit beliefs about the sort of behavior that ought to be rewarded with happiness — probably drive our descriptive theories more than the other way around.
This is one of many reasons to be skeptical of what researchers are measuring when they claim to measure happiness.