Tuesday, February 12, 2008

Adam or Madam

In his book, The Logic of Life, the author, Tim Harford applies economic theory while discussing the sensitive subject of marriage.

He explains that there is interplay of three factors- economies of scale, division of labour and comparative advantage, in assigning roles and responsibility in a marriage.

Let start with the male parent. For the sake of this discussion, let us give him a short and sweet name, say, Raj. And, let us refer to the female parent as – here we will let our imagination go wild- the “wife”. For the sake of convenience, we will drop the inverted commas and call her simply as the wife.

Now, let’s say that these two parents- Raj and wife- have two daughters who are growing up and need attention. Lunch bags have to be packed, pencils need to be sharpened, pens need to be inked, rulers have to be scaled, etc. So, money has to be earned to buy all these things and energy expended in managing the tasks that these things are meant for.

Adam Smith’s principle of division of labour says that each parent must do specialised work, just as in a pin factory, one specialist draws the metal, the other hammers the head, the third inserts them into a piece of paper. Similarly, it doesn’t make sense for each parent to share all the responsibilities equally. Two specialists in respective fields are many times better than two handymen. Make no mistakes, says Tim Harford, marriage is the oldest pin factory of all.

‘A household in which both parents work part-time on their careers and part-time looking after children and the home does not make rational economic sense. Two halves are much less than a whole. Economies of scale dictate that, logically, one partner should apply himself or herself full-time to paid work. The other should work at home-making, and only work for money if there is some spare time available after the household chores. So far this is classic Adam Smith.’

The rule of ‘economy of scale’ dictates that one parent working full time can earn more than two parents working half time each. So, only one parent must go out to work, while the other must get down to household chores. The question is who?

In the hunter-gatherer days and even upto the ‘50s and ‘60s, it was believed that the male parent was better at outdoor work ( and therefore ‘earning’) while the female parent was a specialist at managing household work. But, this was only a partial application of the principle of comparative advantage.

In the case where wife is four times better than husband at house-work and only twice as better at earning money, then it was wrongly concluded that the task of house work should be entrusted to wife. The fact that she was also twice as good in earning money was relegated to the background. ‘The logic of comparative advantage highlighted something that most men—except economists—have found it hard to get their heads around: there is no reason to believe that men were breadwinners because they were any good at it. They might simply have been breadwinners because getting them to help around the house would have been even worse.’

This truth, as we will see, applies to the couple, Raj and wife, who form part of our case study. It so happens that Raj is one of those poor suckers still stuck in an old-economy company, where an increment of 5% in salary, once in a year, is considered par for the course. Whereas wife is in the IT sector, where as is well known, employees go to office only to collect letters from employers that grant them increments once a week, plus stock options and a company-sponsored holiday for entire family in an exotic locale once a month.

So, it makes sound economic sense for wife to apportion her time equally between office and home, earning money for the family during the day and finishing all the household chores in the evening and night, she offering comparative advantage on both counts.

Now, Raj has his own strengths. He is a better blogger than his wife and is in the top one-percentile of the population of over a billion people. He is also a better golfer than his wife, and a better badminton player too. So, clearly, the family would immensely benefit from his specialist roles of blogger in the mornings, golfer in the afternoon and a badminton player in the evenings.

All in all, a happy family. What’s more, a sound economic unit, that Tim Harford would approve of. Each performing specialist roles that offer comparative advantages.



Update (14/02/08).

I am surprised that a reader has presumed that the character Raj is me, and wife is my wife . I ought to have mentioned that this was merely a case study and that if any of the names or characters bears any resemblance to any living person, it is purely coincidental.

I also discussed this case study with a Professor of Economics and sought his opinion. He agrees that the conclusion follows sound reasoning grounded in classical economic theory. He however cautions that some narrow-minded economist might give a twist to the last part and say that Raj cannot, on the one hand, give up work citing reason that he is not a specialist and, on the other hand, choose to be a generalist dividing his time between blogging, golfing and, er, badmintoning. He must specialise in one of these.

As an aside, wasn’t it Harry Truman who said, “Give me a one-armed economist. All the ones I know keep saying, on the one hand, on the other….”

So, if Raj can only find an one-armed economist, he can become a generalised specialist of all three activities and contribute to his family welfare.

8 comments:

Kiran said...

LOL!

Good one!

However, for a holistic perspective, we need to look at this case study also from the perspective of Charles Darwin's 'Survival of the Fittest' theory -

Any which way Raj looks at it, physically (in which case Raj is fit and his wife isn't (am presuming becoz Raj plays badminton)...but still Raj can't survive since the theory of economics wud lead to you starving ) or economically (where Raj's wife wins hands down at office and home) -
ahh! Your..err..Raj's situation is quite precarious I must say ;) :)

Usha said...

My god, the sacrifices you make for the sake of the family - bravo Raj, I have tears in my eyes as I say this.

Revathi said...

I ditto Usha

Raj said...

Kiran, the case study clearly establishes, based on sound economic theory that Raj should retire and play golf. I don't think we should bring in extraneous considereations such as Darwinian logic to confuse the situation. Let Raj be ,I say

Usha, I don't know what I have got to do with it. This is a case study involving fictional characters and any resemblance to any living creature is purely a coincidence

revathy, ditto to you

Sundar Narayanan said...

we need more men like you!

sorry, we need more men like Raj in the case study.

:)

dipali said...

We need a further study on the impact of multiple roles being played by wife on her general health and well being, and on Raj's health in case she decides that he deserves to be clubbed (on the head, preferably) with one of his own golf clubs.

Raj said...

sundar, you said it. Raj of our case study should be our role model in our lives.

dipali, true, we must let the free market decide Raj's fate.

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