Economics of work and leisure

Recently, I cut back work to 4 days a week with a surprising result. Rather than feeling like I am enduring marginally less of a bad thing, I am actually finding work more challenging and interesting – even though I am surrounded by the same public sector circus.

I feel like a 20% cut in work has resulted in an 80% improvement in my work satisfaction, rather than merely a 20% boost.

As an economist I really shouldn’t be surprised. Economic theory suggests an optimal work time – there are decreasing marginal benefits to work (in terms of pay), and increasing marginal costs (in terms of time, level of stress, level of frustration etc).

But this experience (and the popularity of this television show) has got me thinking about how the wellbeing of society at large can be improved by working less.

I want to start this analysis with a simple question. Why do so many different jobs, using different skills, different degrees of physical and mental effort, in different locations, all seem to require a single person for about 40hours per week from Monday to Friday, 9am to 5pm, with 4 weeks holiday per year?

My best explanation is that by standardising the work week and adjusting the number of workers to suit, we get two benefits. First, we have a coincidence of work time. Most jobs require interaction with others, whether as part of a manufacturing process, or as part of a service industry. The second benefit is that we have a coincidence of leisure time. We all know that most people will be available on weekends or evenings for shared leisure activities.

Once the five day week is standardised, we find industries which require workers on evenings and weekends having to pay more for labour. The social norm of higher valued time on weekends and evenings, due to coincidence of leisure, then became embodied in legislation.

Surely there is a loss to society from this standardisation? People will value leisure time differently, and value the coincidence of leisure differently? Thus any regulations enforcing a standard work week will be inefficient in the economic use of the term.

This is true. But as is often the case, there is a trade off between economic efficiency and social cohesion.  Too much work and leisure coordination can result in problems like in the photo above (see the source for more)

Maybe it is time to move away from the standard week, with more casual and part time positions, as a way to improve efficiency. This is already happening. To maintain social cohesion is a casualised workforce, coincidental leisure time can be achieved by declaring more public holidays (Australia currently has about 11 public holidays – 3 at Easter, 3 for the Christmas/New Year period, leaving just 5 for the rest of the year. Sweden has 16 for example, and Japan 15.) I’m sure there are plenty of politically attractive opportunities to declare more holidays – Sorry Day (13th Feb 2008) is one that stands out.

Given my experience moving to a part time job, the idea of a more flexible workforce and more public holidays stands out as a simple way to improve wellbeing in our society.