Articles published in January, 2019
Will making more money save you time? Or will it make you feel more rushed than ever? I’ve been pondering this question because a friend challenged me to figure out whether income poverty and time poverty go hand in hand.
There are cash-poor, time-poor people, who juggle multiple shifts with childcare and spend precious hours on long commutes. There are cash-poor, time-rich people — pensioners or job seekers wondering how to fill the day. But, on average, are richer people more or less busy than those with less money?
On one point, the evidence is clear: whether or not people on high incomes are busy, they think they are. In a forthcoming book, Spending Time (UK) (US), economist Daniel Hamermesh looks at “time stress”, which is measured not by looking at a time-use diary but instead by surveying people to ask if they often feel “rushed” or “pressed for time”.
New parents, especially new mothers, are more likely to complain of time-stress. So are people who work longer hours — no surprise there. But what about income? Prof Hamermesh finds that “people who were always or often stressed had the highest earnings . . . earnings were lowest among the never-stressed”. Money goes hand-in-hand with the sense that there aren’t enough hours in the day.
This isn’t just for the obvious reason that high-income people spend more time doing paid work, although on average they do. (They also sleep less and watch less television.) Of people who work the same hours, having a higher income per hour is correlated with feeling pushed for time. Even people who don’t do any paid work at all feel more rushed if they have more money.
On the face of it, this makes little sense: surely, for any given workload, money is a timesaver rather than a time-sink? Logically, yes. Psychologically, no. It seems that people with more money find more things to do with their time, and so feel more time pressure.
For example, someone with money to spare may book nights at the theatre, reserve tables at fancy restaurants and sign up for bespoke courses. With less cash, cheaper options such as watching TV or reading a book seem more practical. A time-use diary would record all of these activities as “leisure”, but curling up at home with a book is not only cheaper than going to the theatre, but induces less of a sense of time stress.
I’m not saying we should shed a tear for the millionaire who feels she doesn’t have enough hours in the day to spend all her money. But perhaps we shouldn’t be surprised that such feelings are common among richer people.
Another perspective comes from comparing education levels to how people spend their time across a week, as the economists Orazio Attanasio, Erik Hurst and Luigi Pistaferri have done.
People with more education — say, more than 12 years — tend to be richer. But do they also tend to be busier? It seems so. We have US surveys from around 1985 and 2005, and they show that less-educated people have more leisure time than those who are highly educated. (They also had more leisure time in 2005 than in the 1980s.) In contrast, the more highly educated group — who already had less free time in the 1980s — have been getting busier since.
There’s a gender dimension here too. Both in the 1980s and the 2000s, the people with the least leisure time were highly educated women, while those with most time to kill were less-educated men.
The gap between these two groups has widened. While less-educated men have gained 2.5 hours of leisure time a week (to a total of 39 hours), the more-educated women have lost two hours a week (bringing them down to a total of 30 hours). Women also feel more time-stressed than men, even after adjusting for other factors.
All these averages, of course, conceal a great deal of variation. The extra 2.5 hours of leisure a week that less-educated men have gained sound rather pleasant. But behind that average is a growing minority with 60, 80 or 100 hours a week of “leisure time” — better described as unemployment. Although research suggests that some young men seem not to mind unemployment, given that computer games are now so awesome, most people hate it.
So while there are many struggling people who are holding down several different gigs, juggling childcare and burning time on long commutes, overall the evidence shows that the rich are time-poor and the poor are time-rich.
Is this any compensation for the other inequities of life? Probably not — although it depends how much you enjoy your leisure and whether you enjoy your job. Recent studies of people doing gig work or shift-work on irregular hours find that a lot of them love the flexibility but many others hate the uncertainty or want more work.
Research on happiness shows that people — on average — tend to prefer leisure to work. On the other hand, it also shows that being unemployed is utterly miserable. Prof Hamermesh writes, “I would be very happy to wager that most people would choose to feel time-poor rather than income-poor.” It’s hard to disagree.
Written for and first published in the Financial Times on 30 Nov 2018.
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By the time you read this, I shall be sitting in a cinema watching a screening of The Box of Delights (US), nearly three hours of vintage television that captivated me as a boy when broadcast on the BBC in the six weeks running up to Christmas 1984. I’ll be charmed by Patrick Troughton, terrified by Robert Stephens, and mildly amused by the special effects, which were record-breakingly lavish at the time but look amateurish now.
Christmas isn’t Christmas without The Box of Delights. Still, the cinema visit is an indulgence, because a presumably illicit copy of the series has been on YouTube for three years. And there lies an interesting question: what has digitisation done to the richness of our popular culture, from TV and film to music and books?
The obvious response is that digitisation is ruining everything: a children’s series that was once the most expensive ever made by the BBC has been pirated. Why would the BBC — or anyone — invest in the next masterpiece if it will inevitably be ripped off?
This problem is starkest for the music industry, since pirated music is not only free but convenient. For the US music industry, annual retail revenues for physical products have fallen in real terms by more than 90 per cent, from about $20bn in the late 1990s to less than $1.5bn last year. Revenue from downloads and particularly streaming has been growing strongly, but the total takings are less than half what they once were.
Such a collapse in revenues does not seem to be a recipe for a creative flowering. The same threat of piracy — or simply competition from videos of cats riding on Roombas — hangs over film, TV and books. (It also hangs over journalism, but that is a topic for another day.)
On the other hand, digitisation makes it easy to find obscure works. The Box of Delights was merely a memory for many years; finding a copy on VHS video would have been its own epic quest. Now I can watch it on a whim, without leaving my desk.
In the early years of ecommerce, economists Erik Brynjolfsson, Yu Hu and Michael Smith estimated that the availability of obscure book titles alone through websites had increased consumer welfare in the US by about $1bn in the year 2000 — a modest $3 per person, but not nothing. That figure may be much more today.
There is a balance here to be struck, and it is one familiar from debates about copyright. Copyright creates an artificial monopoly, rewarding creators to encourage them to create more. The same artificial monopoly raises prices to consumers and restricts remixes, adaptations and derivative work that is valuable in its own right. Copyright can harm the spread of creative ideas by being too weak, or too strong.
At least copyright rules can be optimised in principle — even if they are in practice much longer than is required.
Technology cannot be so easily tamed by a stroke of the legislator’s pen. So what has new technology done to creative work? Has it been gutted by piracy, or is it flourishing thanks to ever-cheaper means of producing and distributing new ideas?
Joel Waldfogel, an economist and author of a new book, Digital Renaissance (UK) (US), has been trying to figure out the answer to that question. On the question of quantity, there is no doubt: we now have access to vastly more creative works. As well as all the amusing Roomba videos, there is a huge international output, from “Gangnam Style” to the Korean historical dramas that my daughter enjoys so much. Obscure music and out-of-print books can be obtained in digital form within seconds, and YouTube allows me to bore my children with old comedy clips any time I choose.
Isn’t this just strip-mining old assets? No. New releases abound. In the US, 3,000 new movies were released in 2010, up from 500 in 1990. New song publication increased sevenfold between 1988 and 2007, despite plunging revenues. Four hundred thousand books were published in 2012, up from 85,000 in 2008. Much of this new stuff is dreadful, but that doesn’t much matter, since nobody has to watch, hear or read it. What matters is not the average quality, but the quality of the best stuff.
This is hard to assess, but Prof Waldfogel looks at indicators such as reviews — both of professional critics and on online databases — for measures of quality. Among the dross there is an increasing number of both highly rated TV shows and highly rated movies.
Music, too, is doing just fine. Synthesising the ratings of critics suggests that the late 1960s and early 1970s were the golden age for music; any other conclusion would have been a shock. But while more recent music is less highly rated, there is little sign that it is inferior to the highly profitable albums of the 1990s.
This shouldn’t be entirely surprising. Most ideas used to be shut down at an early stage; now many see the light of day. As the late novelist William Goldman reminded us, “nobody knows anything”, so it is no surprise that among these new releases, the occasional gem sparkles. The internet, like the box of delights itself, is full of wonders.
Written for and first published in the Financial Times on 7 December 2018.
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What is the most important job in the world? President? Teacher? Parent? I suggest a post that would not feature on most people’s lists: central banker.
James Carville, who advised US president Bill Clinton, once quipped that he wanted to be reincarnated as the bond market, able to intimidate anybody. But as Ben Bernanke, Mervyn King and more recently Mario Draghi (crisis-era central bank heads in the US, UK and EU respectively) demonstrated, even the bond markets must bow to the desires of a central banker with trillions to spend.
Thank goodness for such financial superpowers. These central bankers have a strong claim to having prevented a rerun of the Great Depression. But the crisis is over, Mr Draghi is the last of that cohort still standing. Now in the final year of his term as European Central Bank president, he announced this week that eurozone quantitative easing would end this month.
So can central bankers now step out of the spotlight and toast their own intelligence, decisiveness and humility with a decent claret? It seems not. Politicians are spoiling for a fight.
President Donald Trump recently accused the US Federal Reserve of having “gone crazy” (the alleged sign of insanity: nudging interest rates up during a boom). Turkey’s Recep Tayyip Erdogan has been leaning on his central bank. And when the Reserve Bank of India’s governor abruptly resigned this week after weeks of political pressure, nobody was buying his claim that it is “for personal reasons”.
In the UK, Mark Carney, the governor of the Bank of England, has drawn fire both from prime minister Theresa May and Brexiter Jacob Rees-Mogg. Central bankers claim to be uninterested in politics, but politics is interested in them.
To understand how we got here, it is worth remembering why the idea of independent central banking, fashionable in the 1920s, became the received wisdom again in the 1990s.
The aim was simple: credibility. Politicians are always tempted to lower interest rates to keep the economy hot, unemployment low and voters happy. This might achieve short-term benefits but it undermines an economy’s health and stokes inflation. Even a principled politician’s promises to curb inflation would not be believed; bond markets would demand an inflation premium, unions big pay rises.
A flint-hearted technocrat can at times deliver better results for everyone. In the early 1980s, Fed chair Paul Volcker demonstrated the basic idea that inflation could be crushed by a sufficiently badass central banker. New Zealand formalised the arrangement a few years later by giving the Reserve Bank of New Zealand an explicit inflation target, regardless of consequences.
That target was hit. “Inflation will be defeated” seems to be partly a self-fulfilling belief, so credibility is a strong argument for central bank independence.
Yet central bankers have experienced some serious mission creep over the past decade. Paul Tucker, a former deputy BoE governor and author of Unelected Power (UK) (US), notes that we have handed ever more power to them. There were reasons for this. Central banks operate through the banking system and have the ability to create new money without limit. Instead of watching the crisis of 2008 from the sidelines, they rolled up their sleeves and got involved in almost every part of the bond and loan markets. Yet these efforts — from buying up debt to regulating mortgage availability — created winners and losers. That is the natural domain of politics.
And so we have three options. The status quo is to leave powerful unelected officials free to act with wide discretion, while serving as a scapegoat for politicians who have nothing else to offer. That will not do.
Or we could double down on autonomy. The central banks got plenty right during the crisis and, given the sorry state of politics at the moment, technocracy has a certain appeal. If the UK appointed Mr Carney supreme dictator for life and bought him a nice dress uniform, he surely couldn’t do a worse job of running the country than the elected politicians currently attempting to interpret the “will of the people”.
But the long-run health of our democracies demands that our politicians start taking responsibility again. The Brexit referendum demonstrated that it is unwise to turn over direct policymaking power to us voters; we lack the time, expertise and interest. Yet it is undemocratic to place the levers of power two or three steps away from the people.
There is no easy or complete solution, but Mr Tucker is right to demand a return to clear mandates for independent agencies, set and monitored by elected politicians. That is partly to keep the technocrats in check, but also to force politicians to step up.
If we see clearly that responsibility lies with elected officials, then we may start to value expertise for the sake of expertise again. We are only likely to trust technocrats to deal with the technical details if we see that politicians are dealing with the politics. We cannot allow unelected people unlimited discretion. But just as importantly, we cannot tolerate our politicians acting like children and hoping that the grown-ups will tidy up the mess.
Written for and first published in the Financial Times on 14 Dec 2018.