Non Work Activities Are Known In Economics Assignments

Unit 3 Scarcity, work, and choice

Themes and capstone units

How individuals do the best they can, and how they resolve the trade-off between earnings and free time

  • Decision making under scarcity is a common problem because we usually have limited means available to meet our objectives.
  • Economists model these situations, first by defining all of the feasible actions, then evaluating which of these actions is best, given the objectives.
  • Opportunity costs describe the unavoidable trade-offs in the presence of scarcity: satisfying one objective more means satisfying other objectives less.
  • A model of decision making under scarcity can be applied to the question of how much time to spend working, when facing a trade-off between more free time and more income.
  • This model also helps to explain differences in the hours that people work in different countries, and the changes in our hours of work throughout history.

Imagine that you are working in New York, in a job that is paying you $15 an hour for a 40-hour working week, which gives you earnings of $600 per week. There are 168 hours in a week, so after 40 hours of work, you are left with 128 hours of free time for all your non-work activities, including leisure and sleep.

Suppose, by some happy stroke of luck, you are offered a job at a much higher wage—six times higher. Your new hourly wage is $90. Not only that, your prospective employer lets you choose how many hours you work each week.

Will you carry on working 40 hours per week? If you do, your weekly pay will be six times higher than before: $3,600. Or will you decide that you are satisfied with the goods you can buy with your weekly earnings of $600? You can now earn this by cutting your weekly hours to just 6 hours and 40 minutes (a six-day weekend!), and enjoy about 26% more free time than before. Or would you use this higher hourly wage rate to raise both your weekly earnings and your free time by some intermediate amount?

The idea of suddenly receiving a six-fold increase in your hourly wage and being able to choose your own hours of work might not seem very realistic. But we know from Unit 2 that technological progress since the Industrial Revolution has been accompanied by a dramatic rise in wages. In fact, the average real hourly earnings of American workers did increase more than six-fold during the twentieth century. And while employees ordinarily cannot just tell their employer how many hours they want to work, over long time periods the typical hours that we work do change. In part, this is a response to how much we prefer to work. As individuals, we can choose part-time work, although this may restrict our job options. Political parties also respond to the preferences of voters, so changes in typical working hours have occurred in many countries as a result of legislation that imposes maximum working hours.

So have people used economic progress as a way to consume more goods, enjoy more free time, or both? The answer is both, but in different proportions in different countries. While hourly earnings increased by more than six-fold for twentieth century Americans, their average annual work time fell by a little more than one-third. So people at the end of this century enjoyed a four-fold increase in annual earnings with which they could buy goods and services, but a much smaller increase of slightly less than one-fifth in their free time. (The percentage increase in free time would be higher if you did not count time spent asleep as free time, but it is still small relative to the increase in earnings.) How does this compare with the choice you made when our hypothetical employer offered you a six-fold increase in your wage?

Figure 3.1 shows trends in income and working hours since 1870 in three countries.

As in Unit 1, income is measured as per-capita GDP in US dollars. This is not the same as average earnings, but gives us a useful indication of average income for the purposes of comparison across countries and through time. In the late nineteenth and early twentieth century, average income approximately trebled, and hours of work fell substantially. During the rest of the twentieth century, income per head rose four-fold.

Hours of work continued to fall in the Netherlands and France (albeit more slowly) but levelled off in the US, where there has been little change since 1960.

While many countries have experienced similar trends, there are still differences in outcomes. Figure 3.2 illustrates the wide disparities in free time and income between countries in 2013. Here we have calculated free time by subtracting average annual working hours from the number of hours in a year. You can see that the higher-income countries seem to have lower working hours and more free time, but there are also some striking differences between them. For example, the Netherlands and the US have similar levels of income, but Dutch workers have much more free time. And the US and Turkey have similar amounts of free time but a large difference in income.

In many countries there has been a huge increase in living standards since 1870. But in some places people have carried on working just as hard as before but consumed more, while in other countries people now have much more free time. Why has this happened? We will provide some answers to this question by studying a basic problem of economics—scarcity—and how we make choices when we cannot have all of everything that we want, such as goods and free time.

Study the model of decision making that we use carefully! It will be used repeatedly throughout the course, because it provides insight into a wide range of economic problems.

Question 3.1 Choose the correct answer(s)

Currently you work for 40 hours per week at the wage rate of £20 an hour. Your free hours are defined as the number of hours not spent in work per week, which in this case is 24 hours × 7 days − 40 hours = 128 hours per week. Suppose now that your wage rate has increased by 25%. If you are happy to keep your total weekly income constant, then:

  • Your total number of working hours per week will fall by 25%.
  • Your total number of working hours per week will be 30 hours.
  • Your total number of free hours per week will increase by 25%.
  • Your total number of free hours per week will increase by 6.25%.
  • The new wage rate is £20 × 1.25 = £25 per hour. Your original weekly income is £20 × 40 hours = £800. Therefore, your new total number of working hours is £800/£25 per hour = 32 hours. This represents a change of (32 – 40)/40 = -20%.
  • The new wage rate is £20 × 1.25 = £25 per hour. Your original weekly income is £20 × 40 hours = £800. Therefore, your new total number of working hours is £800/£25 per hour = 32 hours.
  • The new wage rate is £20 × 1.25 = £25 per hour. Your original weekly income is £20 × 40 hours = £800. Therefore, your new total number of working hours is £800/£25 per hour = 32 hours. Then your free time is now 24 hours per day × 7 days per week – 32 = 136 hours per week, an increase of (136 – 128)/128 = 6.25% ? 25%.
  • The new wage rate is £20 × 1.25 = £25 per hour. Your original weekly income is £20 × 40 hours = £800. Therefore, your new total number of working hours is £800/£25 per hour = 32 hours. Then your free time is now 24 × 7 – 32 = 136 hours per week, an increase of (136 – 128)/128 = 6.25%.

Question 3.2 Choose the correct answer(s)

Look again at Figure 3.1, which depicts the annual number of hours worked against GDP per capita in the US, France and the Netherlands, between 1870 and 2000. Which of the following is true?

  • An increase in GDP per capita causes a reduction in the number of hours worked.
  • The GDP per capita in the Netherlands is lower than that in the US because Dutch people work fewer hours.
  • Between 1870 and 2000, French people have managed to increase their GDP per capita more than ten-fold while more than halving the number of hours worked.
  • On the basis of the evidence in the graph, one day French people will be able to produce a GDP per capita of over $30,000 with less than 1,000 hours of work.
  • The negative relationship between the number of hours worked and GDP per capita does not necessarily imply that one causes the other.
  • The lower GDP per capita in the Netherlands may be due to a number of factors, including the possibility that Dutch people may prefer less income but more leisure time for cultural or other reasons.
  • The GDP per capita of France increased from roughly to $2,000 to $20,000 (ten-fold) while annual hours worked fell from over 3,000 to under 1,500.
  • That would be nice. However past performance does not necessarily mean that the trend will continue in the future.

3.1 Labour and production

In Unit 2 we saw that labour can be thought of as an input in the production of goods and services. Labour is work; for example the welding, assembling, and testing required to make a car. Work activity is often difficult to measure, which is an important point in later units because employers find it difficult to determine the exact amount of work that their employees are doing. We also cannot measure the effort required by different activities in a comparable way (for example, baking a cake versus building a car), so economists often measure labour simply as the number of hours worked by individuals engaged in production, and assume that as the number of hours worked increases, the amount of goods produced also increases.

As a student, you make a choice every day: how many hours to spend studying. There may be many factors influencing your choice: how much you enjoy your work, how difficult you find it, how much work your friends do, and so on. Perhaps part of the motivation to devote time to studying comes from your belief that the more time you spend studying, the higher the grade you will be able to obtain at the end of the course. In this unit, we will construct a simple model of a student’s choice of how many hours to work, based on the assumption that the more time spent working, the better the final grade will be.

We assume a positive relationship between hours worked and final grade, but is there any evidence to back this up? A group of educational psychologists looked at the study behaviour of 84 students at Florida State University to identify the factors that affected their performance.1

At first sight there seems to be only a weak relationship between the average number of hours per week the students spent studying and their Grade Point Average (GPA) at the end of the semester. This is in Figure 3.3.

The 84 students have been split into two groups according to their hours of study. The average GPA for those with high study time is 3.43—only just above the GPA of those with low study time.

Looking more closely, we discover this study is an interesting illustration of why we should be careful when we make ceteris paribus assumptions (remember from Unit 2 that this means ‘holding other things constant’). Within each group of 42 students there are many potentially important differences. The conditions in which they study would be an obvious difference to consider: an hour working in a busy, noisy room may not be as useful as an hour spent in the library.

In Figure 3.4, we see that students studying in poor environments are more likely to study longer hours. Of these 42 students, 31 of them have high study time, compared with only 11 of the students with good environments. Perhaps they are distracted by other people around them, so it takes them longer to complete their assignments than students who work in the library.

Now look at the average GPAs in the top row: if the environment is good, students who study longer do better—and you can see in the bottom row that high study time pays off for those who work in poor environments too. This relationship was not as clear when we didn’t consider the effect of the study environment.

So, after taking into account environment and other relevant factors (including the students’ past GPAs, and the hours they spent in paid work or partying), the psychologists estimated that an additional hour of study time per week raised a student’s GPA at the end of the semester by 0.24 points on average. If we take two students who are the same in all respects except for study time, we predict that the one who studies for longer will have a GPA that is 0.24 points higher for each extra hour: study time raises GPA by 0.24 per hour, ceteris paribus.

Exercise 3.1Ceteris paribus assumptions

You have been asked to conduct a research study at your university, just like the one at Florida State University.

  1. In addition to study environment, which factors do you think should ideally be held constant in a model of the relationship between study hours and final grade?
  2. What information about the students would you want to collect beyond GPA, hours of study, and study environment?

Now imagine a student, whom we will call Alexei. He can vary the number of hours he spends studying. We will assume that, as in the Florida study, the hours he spends studying over the semester will increase the percentage grade that he will receive at the end, ceteris paribus. This relationship between study time and final grade is represented in the table in Figure 3.5. In this model, study time refers to all of the time that Alexei spends learning, whether in class or individually, measured per day (not per week, as for the Florida students). The table shows how his grade will vary if he changes his study hours, if all other factors—his social life, for example—are held constant.

production function
A graphical or mathematical expression describing the amount of output that can be produced by any given amount or combination of input(s). The function describes differing technologies capable of producing the same thing.

This is Alexei’s production function: it translates the number of hours per day spent studying (his input of labour) into a percentage grade (his output). In reality, the final grade might also be affected by unpredictable events (in everyday life, we normally lump the effect of these things together and call it ‘luck’). You can think of the production function as telling us what Alexei will get under normal conditions (if he is neither lucky nor unlucky).

If we plot this relationship on a graph, we get the curve in Figure 3.5. Alexei can achieve a higher grade by studying more, so the curve slopes upward. At 15 hours of work per day he gets the highest grade he is capable of, which is 90%. Any time spent studying beyond that does not affect his exam result (he will be so tired that studying more each day will not achieve anything), and the curve becomes flat.

average product
Total output divided by a particular input, for example per worker (divided by the number of workers) or per worker per hour (total output divided by the total number of hours of labour put in).

We can calculate Alexei’s average product of labour, as we did for the farmers in Unit 2. If he works for 4 hours per day, he achieves a grade of 50. The average product—the average number of percentage points per hour of study—is 50 / 4 = 12.5. In Figure 3.5 it is the slope of a ray from the origin to the curve at 4 hours per day:

marginal product
The additional amount of output that is produced if a particular input was increased by one unit, while holding all other inputs constant.

Alexei’s marginal product is the increase in his grade from increasing study time by one hour. Follow the steps in Figure 3.5 to see how to calculate the marginal product, and compare it with the average product.

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How does the amount of time spent studying affect Alexei’s grade?

Slideline showing how time spent studying affects Alexei’s grade

Figure 3.5 How does the amount of time spent studying affect Alexei’s grade?

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Alexei’s production function

The curve is Alexei’s production function. It shows how an input of study hours produces an output, the final grade.

Figure 3.5a The curve is Alexei’s production function. It shows how an input of study hours produces an output, the final grade.

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Four hours of study per day

If Alexei studies for four hours his grade will be 50.

Figure 3.5b Four hours of study per day: If Alexei studies for four hours his grade will be 50.

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Ten hours of study per day

… and if he studies for 10 hours he will achieve a grade of 81.

Figure 3.5c Ten hours of study per day … and if he studies for 10 hours he will achieve a grade of 81.

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Alexei’s maximum grade

At 15 hours of study per day Alexei achieves his maximum possible grade, 90. After that, further hours will make no difference to his result: the curve is flat.

Figure 3.5d Alexei’s maximum grade: At 15 hours of study per day Alexei achieves his maximum possible grade, 90. After that, further hours will make no difference to his result: the curve is flat.

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Increasing study time from 4 to 5 hours

Increasing study time from 4 to 5 hours raises Alexei’s grade from 50 to 57. Therefore, at 4 hours of study, the marginal product of an additional hour is 7.

Figure 3.5e Increasing study time from 4 to 5 hours: Increasing study time from 4 to 5 hours raises Alexei’s grade from 50 to 57. Therefore, at 4 hours of study, the marginal product of an additional hour is 7.

Study hours0123456789101112131415 or more
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Increasing study time from 10 to 11 hours

Increasing study time from 10 to 11 hours raises Alexei’s grade from 81 to 84. At 10 hours of study, the marginal product of an additional hour is 3. As we move along the curve, the slope of the curve falls, so the marginal product of an extra hour falls. The marginal product is diminishing.

Figure 3.5f Increasing study time from 10 to 11 hours: Increasing study time from 10 to 11 hours raises Alexei’s grade from 81 to 84. At 10 hours of study, the marginal product of an additional hour is 3. As we move along the curve, the slope of the curve falls, so the marginal product of an extra hour falls. The marginal product is diminishing.

Study hours0123456789101112131415 or more
Grade0203342505763697378818486888990

The average product of an hour spent studying

When Alexei studies for four hours per day his average product is 50/4 = 12.5 percentage points, which is the slope of the ray from that point to the origin.

Figure 3.5g The average product of an hour spent studying: When Alexei studies for four hours per day his average product is 50/4 = 12.5 percentage points, which is the slope of the ray from that point to the origin.

Study hours0123456789101112131415 or more
Grade0203342505763697378818486888990

The marginal product is lower than the average product

At 4 hours per day the average product is 12.5. At 10 hours per day it is lower (81/10 = 8.1). The average product falls as we move along the curve. At each point the marginal product (the slope of the curve) is lower than the average product (the slope of the ray).

Figure 3.5h The marginal product is lower than the average product: At 4 hours per day the average product is 12.5. At 10 hours per day it is lower (81/10 = 8.1). The average product falls as we move along the curve. At each point the marginal product (the slope of the curve) is lower than the average product (the slope of the ray).

Study hours0123456789101112131415 or more
Grade0203342505763697378818486888990

The marginal product is the slope of the tangent

The marginal product at four hours of study is approximately 7, which is the increase in the grade from one more hour of study. More precisely, the marginal product is the slope of the tangent at that point, which is slightly higher than 7.

Figure 3.5-i The marginal product is the slope of the tangent: The marginal product at four hours of study is approximately 7, which is the increase in the grade from one more hour of study. More precisely, the marginal product is the slope of the tangent at that point, which is slightly higher than 7.

At each point on the production function, the marginal product is the increase in the grade from studying one more hour. The marginal product corresponds to the slope of the production function.

diminishing returns
A situation in which the use of an additional unit of a factor of production results in a smaller increase in output than the previous increase. Also known as: diminishing marginal returns in production

Alexei’s production function in Figure 3.5 gets flatter the more hours he studies, so the marginal product of an additional hour falls as we move along the curve. The marginal product is diminishing. The model captures the idea that an extra hour of study helps a lot if you are not studying much, but if you are already studying a lot, then studying even more does not help very much.

concave function
A function of two variables for which the line segment between any two points on the function lies entirely below the curve representing the function (the function is convex when the line segment lies above the function).

In Figure 3.5, output increases as the input increases, but the marginal product falls—the function becomes gradually flatter. A production function with this shape is described as concave.

If we compare the marginal and average products at any point on Alexei’s production function, we find that the marginal product is below the average product. For example, when he works for four hours his average product is 50/4 = 12.5 points per hour, but an extra hour’s work raises his grade from 50 to 57, so the marginal product is 7. This happens because the marginal product is diminishing: each hour is less productive than the ones that came before. And it implies that the average product is also diminishing: each additional hour of study per day lowers the average product of all his study time, taken as a whole.

This is another example of the diminishing average product of labour that we saw in Unit 2. In that case, the average product of labour in food production (the food produced per worker) fell as more workers cultivated a fixed area of land.

Lastly, notice that if Alexei was already studying for 15 hours a day, the marginal product of an additional hour would be zero. Studying more would not improve his grade. As you might know from experience, a lack of either sleep or time to relax could even lower Alexei’s grade if he worked more than 15 hours a day. If this were the case, then his production function would start to slope downward, and Alexei’s marginal product would become negative.

tangency
When two curves share one point in common but do not cross. The tangent to a curve at a given point is a straight line that touches the curve at that point but does not cross it.

Marginal change is an important and common concept in economics. You will often see it marked as a slope on a diagram. With a production function like the one in Figure 3.5, the slope changes continuously as we move along the curve. We have said that when Alexei studies for 4 hours a day the marginal product is 7, the increase in the grade from one more hour of study. Because the slope of the curve changes between 4 and 5 hours on the horizontal axis, this is only an approximation to the actual marginal product. More precisely, the marginal product is the rate at which the grade increases, per hour of additional study. In Figure 3.5 the true marginal product is the slope of the tangent to the curve at 4 hours. In this unit, we will use approximations so that we can work in whole numbers, but you may notice that sometimes these numbers are not quite the same as the slopes.

Exercise 3.2 Production functions

  1. Draw a graph to show a production function that, unlike Alexei’s, becomes steeper as the input increases.
  2. Can you think of an example of a production process that might have this shape? Why would the slope get steeper?
  3. What can you say about the marginal and average products in this case?

Marginal product

The marginal product is the rate of change of the grade at 4 hours of study. Suppose Alexei has been studying for 4 hours a day, and studies for 1 minute longer each day (a total of 4.016667 hours). Then, according to the graph, his grade will rise by a very small amount—about 0.124. A more precise estimate of the marginal product (the rate of change) would be:

If we looked at smaller changes in study time even further (the rise in grade for each additional second of study per day, for example) we would get closer to the true marginal product, which is the slope of the tangent to the curve at 4 hours of study.

Question 3.3 Choose the correct answer(s)

Figure 3.5 shows Alexei’s production function, with the final grade (the output) related to the number of hours spent studying (the input).

Which of the following is true?

  • The marginal product and average product are approximately the same for the initial hour.
  • The marginal product and the average product are both constant beyond 15 hours.
  • The horizontal production function beyond 15 hours means that studying for more than 15 hours is detrimental to Alexei’s performance.
  • The marginal product and the average product at 20 hours are both 4.5.
  • Because there are no previous hours to consider, the average product for the initial hour is just the improvement produced by a single hour, which in turn approximates to the marginal product from 0 to 1 hours (the precise marginal product changes over this interval, reflected in the decreasing slope of the production function).
  • The marginal product is constant beyond 15 hours, but the average product continues to diminish. This is because the marginal product (zero) is less than the average product, which remains positive but is decreasing (more hours with no additional improvement reduces the average).
  • If studying for more than 15 hours had a negative effect on Alexei’s grade, then the marginal product would be negative, implying a downward-sloping curve beyond 15 hours.
  • The average product at 20 hours is 90 grade points/20 hours = 4.5 points per hour. The marginal product, however, is zero – as indicated by the production function being flat beyond 15 hours.

3.2 Preferences

preferences
A description of the benefit or cost we associate with each possible outcome.

If Alexei has the production function shown in Figure 3.5, how many hours per day will he choose to study? The decision depends on his preferences—the things that he cares about. If he cared only about grades, he should study for 15 hours a day. But, like other people, Alexei also cares about his free time—he likes to sleep, go out or watch TV. So he faces a trade-off: how many percentage points is he willing to give up in order to spend time on things other than study?

We illustrate his preferences using Figure 3.6, with free time on the horizontal axis and final grade on the vertical axis. Free time is defined as all the time that he does not spend studying. Every point in the diagram represents a different combination of free time and final grade. Given his production function, not every combination that Alexei would want will be possible, but for the moment we will only consider the combinations that he would prefer.

We can assume:

  • For a given grade, he prefers a combination with more free time to one with less free time. Therefore, even though both A and B in Figure 3.6 correspond to a grade of 84, Alexei prefers A because it gives him more free time.
  • Similarly, if two combinations both have 20 hours of free time, he prefers the one with a higher grade.
  • But compare points A and D in the table. Would Alexei prefer D (low grade, plenty of time) or A (higher grade, less time)? One way to find out would be to ask him.
utility
A numerical indicator of the value that one places on an outcome, such that higher valued outcomes will be chosen over lower valued ones when both are feasible.

Suppose he says he is indifferent between A and D, meaning he would feel equally satisfied with either outcome. We say that these two outcomes would give Alexei the same utility. And we know that he prefers A to B, so B provides lower utility than A or D.

A systematic way to graph Alexei’s preferences would be to start by looking for all of the combinations that give him the same utility as A and D. We could ask Alexei another question: ‘Imagine that you could have the combination at A (15 hours of free time, 84 points). How many points would you be willing to sacrifice for an extra hour of free time?’ Suppose that after due consideration, he answers ‘nine’. Then we know that he is indifferent between A and E (16 hours, 75 points). Then we could ask the same question about combination E, and so on until point D. Eventually we could draw up a table like the one in Figure 3.6. Alexei is indifferent between A and E, between E and F, and so on, which means he is indifferent between all of the combinations from A to D.

indifference curve
A curve of the points which indicate the combina­tions of goods that provide a given level of utility to the individual.

The combinations in the table are plotted in Figure 3.6, and joined together to form a downward-sloping curve, called an indifference curve, which joins together all of the combinations that provide equal utility or ‘satisfaction’.

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Hours of free time151617181920
Final grade847567605450

Mapping Alexei’s preferences

Mapping Alexei’s preferences.

Figure 3.6 Mapping Alexei’s preferences.

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Alexei prefers more free time to less free time

Combinations A and B both deliver a grade of 84, but Alexei will prefer A because it has more free time.

Figure 3.6a Combinations A and B both deliver a grade of 84, but Alexei will prefer A because it has more free time.

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Alexei prefers a high grade to a low grade

At combinations C and D Alexei has 20 hours of free time per day, but he prefers D because it gives him a higher grade.

Figure 3.6b At combinations C and D Alexei has 20 hours of free time per day, but he prefers D because it gives him a higher grade.

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Indifference

… but we don’t know whether Alexei prefers A or E, so we ask him: he says he is indifferent.

Figure 3.6c … but we don’t know whether Alexei prefers A or E, so we ask him: he says he is indifferent.

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More combinations giving the same utility

Alexei says that F is another combination that would give him the same utility as A and E.

Figure 3.6d Alexei says that F is another combination that would give him the same utility as A and E.

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Constructing the indifference curve

By asking more questions, we discover that Alexei is indifferent between all of the combinations between A and D.

Figure 3.6e By asking more questions, we discover that Alexei is indifferent between all of the combinations between A and D.

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Constructing the indifference curve

These points are joined together to form an indifference curve.

Figure 3.6f These points are joined together to form an indifference curve.

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Other indifference curves

Indifference curves can be drawn through any point in the diagram, to show other points giving the same utility. We can construct other curves starting from B or C in the same way as before, by finding out which combinations give the same amount of utility.

Figure 3.6g Indifference curves can be drawn through any point in the diagram, to show other points giving the same utility. We can construct other curves starting from B or C in the same way as before, by finding out which combinations give the same amount of utility.

If you look at the three curves drawn in Figure 3.6, you can see that the one through A gives higher utility than the one through B. The curve through C gives the lowest utility of the three. To describe preferences we don’t need to know the exact utility of each option; we only need to know which combinations provide more or less utility than others.

consumption good
A good or service that satisfies the needs of consumers over a short period.

The curves we have drawn capture our typical assumptions about people’s preferences between two goods. In other models, these will often be consumption goods such as food or clothing, and we refer to the person as a consumer. In our model of a student’s preferences, the goods are ‘final grade’ and ‘free time’. Notice that:

  • Indifference curves slope downward due to trade-offs: If you are indifferent between two combinations, the combination that has more of one good must have less of the other good.
  • Higher indifference curves correspond to higher utility levels: As we move up and to the right in the diagram, further away from the origin, we move to combinations with more of both goods.
  • Indifference curves are usually smooth: Small changes in the amounts of goods don’t cause big jumps in utility.
  • Indifference curves do not cross: Why? See Exercise 3.3.
  • As you move to the right along an indifference curve, it becomes flatter.
marginal rate of substitution (MRS)
The trade-off that a person is willing to make between two goods. At any point, this is the slope of the indifference curve. See also: marginal rate of transformation.

To understand the last property in the list, look at Alexei’s indifference curves, which are plotted again in Figure 3.7. If he is at A, with 15 hours of free time and a grade of 84, he would be willing to sacrifice 9 percentage points for an extra hour of free time, taking him to E (remember that he is indifferent between A and E). We say that his marginal rate of substitution (MRS) between grade points and free time at A is nine; it is the reduction in his grade that would keep Alexei’s utility constant following a one-hour increase of free time.

We have drawn the indifference curves as becoming gradually flatter because it seems reasonable to assume that the more free time and the lower the grade he has, the less willing he will be to sacrifice further percentage points in return for free time, so his MRS will be lower. In Figure 3.7 we have calculated the MRS at each combination along the indifference curve. You can see that, when Alexei has more free time and a lower grade, the MRS—the number of percentage points he would give up to get an extra hour of free time—gradually falls.

AEFGHD
Hours of free time151617181920
Final grade847567605450
Marginal rate of substitution between grade and free time98764

The marginal rate of substitution

The marginal rate of substitution.

Figure 3.7 The marginal rate of substitution.

Alexei’s indifference curves

The diagram shows three indifference curves for Alexei. The curve furthest to the left offers the lowest satisfaction.

Figure 3.7a The diagram shows three indifference curves for Alexei. The curve furthest to the left offers the lowest satisfaction.

Point A

At A, he has 15 hours of free time and his grade is 84.

Figure 3.7b At A, he has 15 hours of free time and his grade is 84.

Alexei is indifferent between A and E

He would be willing to move from A to E, giving up 9 percentage points for an extra hour of free time. His marginal rate of substitution is 9. The indifference curve is steep at A.

Figure 3.7c He would be willing to move from A to E, giving up 9 percentage points for an extra hour of free time. His marginal rate of substitution is 9. The indifference curve is steep at A.

Alexei is indifferent between H and D

At H he is only willing to give up 4 points for an extra hour of free time. His MRS is 4. As we move down the indifference curve, the MRS diminishes, because points become scarce relative to free time. The indifference curve becomes flatter.

Figure 3.7d At H he is only willing to give up 4 points for an extra hour of free time. His MRS is 4. As we move down the indifference curve, the MRS diminishes, because points become scarce relative to free time. The indifference curve becomes flatter.

All combinations with 15 hours of free time

Look at the combinations with 15 hours of free time. On the lowest curve the grade is low, and the MRS is small. Alexei would be willing to give up only a few points for an hour of free time. As we move up the vertical line the indifference curves are steeper: the MRS increases.

Figure 3.7e Look at the combinations with 15 hours of free time. On the lowest curve the grade is low, and the MRS is small. Alexei would be willing to give up only a few points for an hour of free time. As we move up the vertical line the indifference curves are steeper: the MRS increases.

All combinations with a grade of 54

Now look at all the combinations with a grade of 54. On the curve furthest to the left, free time is scarce, and the MRS is high. As we move to the right along the red line he is less willing to give up points for free time. The MRS decreases–the indifference curves get flatter.

Figure 3.7f Now look at all the combinations with a grade of 54. On the curve furthest to the left, free time is scarce, and the MRS is high. As we move to the right along the red line he is less willing to give up points for free time. The MRS decreases–the indifference curves get flatter.

The MRS is just the slope of the indifference curve, and it falls as we move to the right along the curve. If you think about moving from one point to another in Figure 3.7, you can see that the indifference curves get flatter if you increase the amount of free time, and steeper if you increase the grade. When free time is scarce relative to grade points, Alexei is less willing to sacrifice an hour for a higher grade: his MRS is high and his indifference curve is steep.

As the analysis in Figure 3.7 shows, if you move up the vertical line through 15 hours, the indifference curves get steeper: the MRS increases. For a given amount of free time, Alexei is willing to give up more grade points for an additional hour when he has a lot of points compared to when he has few (for example, if he was in danger of failing the course). By the time you reach A, where his grade is 84, the MRS is high; grade points are so plentiful here that he is willing to give up 9 percentage points for an extra hour of free time.

You can see the same effect if you fix the grade and vary the amount of free time. If you move to the right along the horizontal line for a grade of 54, the MRS becomes lower at each indifference curve. As free time becomes more plentiful, Alexei becomes less and less willing to give up grade points for more time.

Exercise 3.3 Why indifference curves never cross

In the diagram below, IC1 is an indifference curve joining all the combinations that give the same level of utility as A. Combination B is not on IC1.

  1. Does combination B give higher or lower utility than combination A? How do you know?
  2. Draw a sketch of the diagram, and add another indifference curve, IC2, that goes through B and crosses IC1. Label the point at which they cross as C.
  3. Combinations B and C are both on IC2. What does that imply about their levels of utility?
  4. Combinations C and A are both on IC1. What does that imply about their levels of utility?
  5. According to your answers to (3) and (4), how do the levels of utility at combinations A and B compare?
  6. Now compare your answers to (1) and (5), and explain how you know that indifference curves can never cross.

Exercise 3.4 Your marginal rate of substitution

Imagine that you are offered a job at the end of your university course with a salary per hour (after taxes) of £12.50. Your future employer then says that you will work for 40 hours per week leaving you with 128 hours of free time per week. You tell a friend: ‘at that wage, 40 hours is exactly what I would like.’

  1. Draw a diagram with free time on the horizontal axis and weekly pay on the vertical axis, and plot the combination of hours and the wage corresponding to your job offer, calling it A. Assume you need about 10 hours a day for sleeping and eating, so you may want to draw the horizontal axis with 70 hours at the origin.
  2. Now draw an indifference curve so that A represents the hours you would have chosen yourself.
  3. Now imagine you were offered another job requiring 45 hours of work per week. Use the indifference curve you have drawn to estimate the level of weekly pay that would make you indifferent between this and the original offer.
  4. Do the same for another job requiring 35 hours of work per week. What level of weekly pay would make you indifferent between this and the original offer?
  5. Use your diagram to estimate your marginal rate of substitution between pay and free time at A.

Question 3.4 Choose the correct answer(s)

Figure 3.6

"House Work" redirects here. For the novel by Kristina McGrath, see House Work (novel).

"Housework" redirects here. It is not to be confused with Homework.

Homemaking is a mainly American term for the management of a home, otherwise known as housework, housekeeping, or household management. It is the act of overseeing the organizational, day-to-day operations of a house or estate, and the managing of other domestic concerns. A person in charge of the homemaking, who is not employed outside the home, is in the U.S. and Canada often called a homemaker, a term for a housewife or a househusband. The term "homemaker", however, may also refer to a social worker who manages a household during the incapacity of the housewife or househusband.[1]

Housework is not always a lifetime commitment; many, for economic or personal reasons, return to the workplace. In previous decades, there were many mandatory courses for the young to learn the skills of homemaking. In high school, courses included cooking, nutrition, home economics, family and consumer science (FACS), and food and cooking hygiene. This last one may underlie the tradition that a homemaker is portrayed wearing an apron. More recently, most of these courses have been abolished, and many youths in high school and college would be more likely to study child development and the management of children's behavior.

Household tools[edit]

Main articles: Domestic technology, Category:Home appliances, and Category:Cleaning tools

The method and function of housework are different in the industrial world and in other countries, with the balance of convenience, labor-saving devices and easier methods being in the industrial homemaker's favor. The reason for this is that mechanical invention has been applied extensively to different tasks of the home. Inventors have developed mechanical labor-saving devices not only for the shop and office, but also for the home. There are, on the market, thousands of household tools, devices and equipment for every domestic need. It only remains for the homemaker to choose between them.

Another reason for the great supply and demand for household labor savers in the industrial world is that the homemaker has to face the increasingly complex problem of scarce domestic help. With cheap labor, the need for the mechanical replacers of labor, or "mechanical servants," will not be keenly felt, however, the majority of homemakers perform their own household tasks. It is to this class of homemakers who are actively concerned in domestic work that the labor-saver and improved modern tool most appeal. The homemaker's time and effort are worth conserving by every means. Homemakers should, therefore, be eager to buy and use all the household tools that will save their strength and time and liberate them from household drudgery.

While some homemakers are "handy" with tools, the fact remains that most homemakers are unfamiliar with the different principles involved in mechanical tools and devices. The homemaker, however, is called to have knowledge of the principles of applied mechanics. Courses in school physics unfortunately leave a student with little practical knowledge that can be applied to domestic equipment. The gaining of knowledge concerning domestic tools may lead the homemaker to purchase good quality equipment, which may assist in saving time and labor.

Housekeeping[edit]

Housekeeping by the homemaker is the care and control of property, ensuring its maintenance and proper use and appearance. A home is a place of residence.[2] In a private home a maid or housekeeper might be employed to do some of the housekeeping. Housework is work done by the act of housekeeping. Some housekeeping is housecleaning and some housekeeping is home chores. Home chores are housework that needs to be done at regular intervals,[3] Housekeeping includes the budget and control of expenditures, preparing meals and buying food, paying the heat bill, and cleaning the house.[4]

Cooking[edit]

Main article: Cooking

See also: List of food preparation utensils, Diet (nutrition), Cuisine, and Cookbook

Most modern-day houses contain sanitary facilities and a means of preparing food. A kitchen is a room or part of a room used by the Homemaker for cooking, food preparation and food preservation. In the West, a modern kitchen is typically equipped with a stove, an oven, a sink with hot and cold running water, a refrigerator and kitchen cabinets. Many homemakers use a microwave oven, a dishwasher and other electric appliances like blender and convection cooker and automatic appliances like rotimatic and automatic cookers. The main function of a kitchen is cooking or preparing food but it may also be used for dining and entertaining.

Cooking is the process of preparing food with or without heat, making and selecting, measuring and combining ingredients in an ordered procedure for producing safe and edible food. The process encompasses a vast range of methods, tools and combinations of ingredients to alter the flavor, appearance, texture, or digestibility of food. Factors affecting the final outcome include the variability of ingredients, ambient conditions, tools, and the skill of the individual doing the actual cooking.

The diversity of cooking worldwide is a reflection of the aesthetic, agricultural, economic, cultural, social and religious diversity throughout the nations, races, creeds and tribes across the globe. Applying heat to a food usually, though not always, chemically transforms it, thus changing its flavor, texture, consistency, appearance, and nutritional properties. Methods of cooking that involve the boiling of liquid in a receptacle have been practised at least since the 10th millennium BC, with the introduction of pottery.

Cleaning[edit]

Housecleaning by the homemaker is the systematic process of making a home neat and clean. This may be applied more broadly that just an individual home, or as a metaphor for a similar "clean up" process applied elsewhere such as a procedural reform. In the process of housecleaning general cleaning activities are completed, such as disposing of rubbish, storing of belongings in regular places, cleaning dirty surfaces, dusting and vacuuming. The details of this are various and complicated enough that many books have been published on the subject. How-to sites on the internet have many articles on housecleaning. Tools include the vacuum cleaner, broom and mop. Supplies such as cleaning solutions and sponges are sold in grocery stores and elsewhere. Professional cleaners can be hired for less frequent or specialist tasks such as cleaning blinds, rugs, and sofas. Professional services are also offered for the basic tasks. Safety is a consideration because some cleaning products are toxic and some cleaning tasks are physically demanding. Green cleaning refers to cleaning without causing pollution. The history of housecleaning has links to the advancement of technology.

Outdoor housecleaning chores include removing leaves from rain gutters, washing windows, sweeping doormats, cleaning the pool, putting away lawn furniture, and taking out the trash.[5]

Laundry[edit]

See also: Ironing

Laundry refers to the act of washingclothing and linens, the place where that washing is done, and/or that which needs to be, is being, or has been laundered. Various chemicals may be used to increase the solvent power of water, such as the compounds in soaproot or yucca-root used by Native American tribes. Soap, a compound made from lye (from wood-ash) and fat, is an ancient and very common laundry aid. Modern washing machines typically use powdered or liquid laundry detergent in place of more traditional soap. Once clean, the clothes have been wrung out — twisted to remove most of the water. Then they were hung up on poles or clotheslines to air dry, or sometimes just spread out on clean grass.

Washing machines and dryers are now fixtures in homes around the world. In some parts of the world, including the USA, Canada, and Switzerland, apartment buildings and dormitories often have laundry rooms, where residents share washing machines and dryers. Usually the machines are set to run only when money is put in a coin slot. In other parts of the world, apartment buildings with laundry rooms are uncommon, and each apartment may have its own washing machine. Those without a machine at home or the use of a laundry room must either wash their clothes by hand or visit a commercial laundromat.

A clothes dryer is a household appliance that is used to remove moisture from a load of clothing and other textiles, generally shortly after they are cleaned in a washing machine. Most dryers consist of a rotating drum called a tumbler through which heated air is circulated to evaporate the moisture from the load. The tumbler is rotated relatively slowly in order to maintain space between the articles in the load. In most cases, the tumbler is belt-driven by an induction motor. Using these machines may cause clothes to shrink, become less soft (due to loss of short soft fibers/ lint) and fade. For these reasons, as well as environmental concerns, many people use open air methods such as a clothes line and clotheshorse.

Laundry starch is used in the laundering of clothes. Starch was widely used in Europe in the 16th and 17th centuries to stiffen the wide collars and ruffs of fine linen which surrounded the necks of the well-to-do. During the 19th century and early 20th century, it was stylish to stiffen the collars and sleeves of men'sshirts and the ruffles of girls' petticoats by applying starch to them as the clean clothes were being ironed. Aside from the smooth, crisp edges it gave to clothing, it served practical purposes as well. Dirt and sweat from a person's neck and wrists would stick to the starch rather than to the fibers of the clothing, and would easily wash away along with the starch. After each laundering, the starch would be reapplied. Today the product is sold in aerosol cans for home use.

Maintenance[edit]

Main article: Maintenance, repair and operations

Homemakers that follow predictive maintenance techniques determine the condition of in-service equipment in order to predict when maintenance should be performed. This approach offers cost savings over routine or time-based maintenance, because tasks are performed only when warranted. Homemakers that follow preventive maintenance methods ensure that household equipment and the house are in satisfactory operating condition by providing for inspection, detection, and correction of incipient failures either before they occur or before they develop into major defects.

Home maintenance[edit]

Main articles: Home repair, Home improvement, Home automation, and Handyman

Home maintenance involves the diagnosis and resolution of problems in a home, and is related to home maintenance to avoid such problems. Many types of maintenance are "Do it yourself" (DIY) projects. Maintenance is not necessarily the same as home improvement, although many improvements can result from repairs or maintenance. Often the costs of larger repairs will justify the alternative of investment in full-scale improvements. It may make just as much sense to upgrade a home system (with an improved one) as to repair it or incur ever-more-frequent and expensive maintenance for an inefficient, obsolete or dying system. For a DIY project, also useful is the established limits on time and money investments before a repair (or list of repairs) become overwhelming and discouraging, and less likely to ever be completed.

Lawn maintenance[edit]

Main articles: Lawn care and Gardening

Homemakers that have a lawn responsibility adhere to seasonal lawn care practices, which vary to some extent depending on the climate zone and type of grass that is grown (whether cool season or warm season varieties). Various recognized method used by homemakers in lawn care are observed in any area. In spring or early summer, homemakers seed, sod, or sprig a yard when the ground is warmer. In Summer lawn mowers are used at high cutting for cool season grass, and lower cutting for warm season lawns. In autumn, lawns are mown by homemakers at a lower height and thatch build-up that occurs in warm season grasses are removed.[6] Homemakers do add sandy loam and apply fertilizer, containing some type of wetting agent. Cool season lawns are planted in the autumn with adequate rainfall. Lawn care in the winter is minimal, requiring only light feedings of organic material, such as green-waste compost, and minerals to encourage earthworms and beneficial microbes.

Management[edit]

Household management by the homemaker is the act of overseeing the organizational, financial, and day-to-day operations of a house or estate. It differs from housekeeping, which consists of the physical maintenance and cleaning of a house.

Also common in the U.S are homemaking parties which involve a group of people doing household work instead of hanging out with their friends.

House organization[edit]

House organization or home organization includes interior design which is making the home aesthetically pleasing; and de-cluttering which is removing unnecessary things from the house.

Interior design[edit]

Interior design is making the home aesthetically pleasing. Its activities include arranging furniture, having plants inside the house, and more.

De-cluttering[edit]

Household de-cluttering involves putting things in their proper place after they have been used. "Cleaning up your mess" might involve removing glasses or eating utensils from the living room if you have eaten a meal there in front of the television. If several people have done that over a few days and not removed their glasses, dishes and utensils from the living room, the living room is considered to be "cluttered" with dishes. The dishes are out of place because they belong in the kitchen, washed and put away in the cupboards. That is the most common example of clutter in a modern American household.

There is another definition of clutter, which refers to having simply too many things and not enough room for all of it. Sometimes as happens in Asian households, the items are necessary, but the house is simply too small, and ingenious methods are needed to organize everything so that unsightly clutter does not result. However, removing unneeded or no longer necessary objects from a household or home is also an aspect of de-cluttering. Objects can be given away to friends or charitable organizations, sold as second-hand, recycled or thrown away.

Extreme forms of an inability to de-clutter is a behavioral aspect of compulsive hoarding. On the other end, a society that relies overly much on generating and then disposing of waste is referred to as throw-away society.

Household purchasing[edit]

Main articles: Purchasing, Household budget, and Shopping

Household purchasing refers to homemaker's attempt to acquire goods or services to accomplish the goals of the household. Though there are several households that attempt to set standards in the purchasing process, processes can vary greatly between households. Typically the word “purchasing” is not used interchangeably with the word “procurement”, since procurement typically includes other concepts. Home makers decide the market goods that the household will buy, such as the groceries which have been bought at a grocer's.

Another important purchase handled by homemakers is the power source used for appliances. Home or other building heating may include boilers, furnaces, and water heaters. Compressed natural gas is used in rural homes without connections to piped-in public utility services, or with portable grills. However, due to being less economical than LPG, LPG (Propane) is the dominant source of rural gas for natural gas-powered ranges and/or ovens, natural gas-heated clothes dryers, heating/cooling and central heating. The amount of usages is determined by factors such as natural gas prices.

Servants[edit]

Main articles: Maid, Butler, and Domestic worker

Homemakers may manage household workers or "domestic workers".

Work strategies[edit]

Main articles: Household and Employment

In sociology, household work strategy is the division of labour between members of a household, whether implicit or the result of explicit decision–making, with the alternatives weighed up in a simplified type of cost-benefit analysis.[7][8] It is a plan for the relative deployment of household members' time between the three domains of employment:

  1. in the market economy, including home-based self-employment second jobs, in order to obtain money to buy goods and services in the market;
  2. domestic production work, such as cultivating a vegetable patch or raising chickens, purely to supply food to the household; and
  3. domestic consumption work to provide goods and services directly within the household, such as cooking meals, child–care, household repairs, or the manufacture of clothes and gifts.

Household work strategies may vary over the life-cycle, as household members age, or with the economic environment; they may be imposed by one person or be decided collectively.[9]

Household production[edit]

Homemaking is described by economists as "household production". Household production has been defined as "the production of the goods and services by the members of a household, for their own consumption, using their own capital and their own unpaid labor. Goods and services produced by households for their own use include accommodation, meals, clean clothes, and child care. The process of household production involves the transformation of purchased intermediate commodities into final consumption commodities. Households use their own capital and their own labor." [10]

Goods and services created at the household level are generally consumed within the country within which they were produced, and hence contribute to "Domestic Consumption".[11]

Wages for housework[edit]

The International Wages for Housework Campaign was a global, social movement co-founded in 1972 in Padua, Italy, by author and activist Selma James. The Campaign was formed to raise awareness of how housework and childcare are the base of all industrial work and to stake the claim that these unavoidable tasks should be compensated as paid, wage labor.[12] The demands for the Wages for Housework formally called for economic compensation for domestic work but also used these demands to more generally call attention to the affective labors of women, the reliance of capitalist economies on exploitative labor practices against women, and leisure inequality.[13]

History[edit]

Many home appliances have been invented that make housework faster or more effective compared to before the industrial revolution. These include:

Utilities can potentially eliminate work like gathering and chopping firewood, shovelling coal, fetching water from outdoors, and heating cold tap water.

Historian Ruth Schwartz Cowan claims that homemakers in the 1800s performed about 50–60 hours of work per week, and that this is the same as the 1990s. She says that labor-saving devices have been used to make the same amount of time do more work, such as by vacuuming a rug instead of sweeping it, or washing fabrics more frequently. Modern parents also more frequently transport their children after-school activities, and doctors no longer make house calls.[14]

See also[edit]

References and sources[edit]

References
  1. ^"homemaker - definition of homemaker by The Free Dictionary". Thefreedictionary.com. Retrieved 2015-07-02. 
  2. ^"'Home' - Definitions from Dictionary.com". Dictionary.com. Retrieved 2008-05-08. 
  3. ^Gove, Philip et al. 1961. Webster’s Third New International Dictionary of the English Language Unabridged. Springfield, Massachusetts: G & C Merriam Company
  4. ^Ansley, Clark et al. 1935. The Columbia Encyclopedia in One Volume. Morningside Heights, NY: Columbia University Press.
  5. ^Smallin, Donna. 2006. Cleaning Plain & Simple. Storey Publishing, North Adams, MA.
  6. ^Lawn experts are divided in their opinions on this.
  7. ^[1]Archived December 4, 2008, at the Wayback Machine.
  8. ^Divisions of Labour Ray Pahl (1984)
  9. ^"Household work strategy". Encyclopedia.com. Retrieved 2015-07-02. 
  10. ^Ironmonger, D. (2000-02-02). "Household Production and the Household Economy". Ideas.repec.org. Retrieved 2015-07-02. 
  11. ^"Domestic Consumption". Dictionary.cambridge.org. Retrieved 2015-07-02. 
  12. ^James, Selma. "Is Transformation Possible? They Say We Can't. We Must". Off Our Backs. Off Our Backs. Inc. p. 42. JSTOR 20838923. 
  13. ^"More Smiles? More Money". nplusonemag.com. Retrieved 2015-07-02. 
  14. ^"No. 1088: Housework". Uh.edu. 2004-08-01. Retrieved 2016-07-07. 
Sources
  • Lopata, H. Z. (1994). Circles and settings: Role changes of American women. SUNY series in gender and society. Albany: State University of New York Press. "Homemaker" Page 137+.
  • Arnold, E. (1993). Voices of American homemakers. Bloomington: Indiana University Press.
  • Harvey, L. S. (1920). Food facts for the home-maker. Boston: Houghton Mifflin company.
  • Frederick, C. (1919). Household engineering; Scientific management in the home. Chicago: American school of home economics.
  • Snedden, D. (1919). Vocational homemaking education: Some problems and proposals. New York City: Teachers College, Columbia University.
  • Kinne, H., & Cooley, A. M. (1914). Shelter and clothing: A textbook of the household arts. New York: Macmillan.

Further reading[edit]

  • "Friendly Visiting Among the Poor"; by Mary Ellen Richmond. "The Homemaker", Pages 64ff.
Title page of Our Home Cyclopedia: Cookery and Housekeeping, published in Detroit, Michigan, in 1889

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