When we enjoy recreation, our time is combined with goods and services such as sporting equipment or admission fees. Thus, variations in the price of products used for leisure might change their consumption levels and alter the amount of time devoted to enjoying recreation. Given the importance of recreation in our time budgets, the amount of time allocated to other activities – such as work – could also be affected.
In a study appearing in the July 2007 issue of the Journal of Labor Economics, Jorge Gonzales-Chapela (Universidad de Alicante, Spain) combines individual-level data in the United States with metropolitan price indices to better understand how changes in the price of recreation goods can influence the labor/leisure balance.
Gonzales-Chapela finds that for every 1 percent increase in the price of recreation goods men between the ages of 25 and 54 who work full-time will work an extra 3.2 hours a year. Men in this age range devote an average of 3.7 hours per day to “socializing, relaxing, and leisure” – their third most time-consuming daily activity – meaning that even a 1 percent rise in the price of recreation translates into the loss of one day’s worth of leisure per year.
“Since the relative price of recreation goods dropped, for instance, in the United States by about 15 percent between 1976 and 1981, if this price change could be considered as anticipated, a prime-age man would have lowered – on average—his market time by some 48 annual hours between 1976 and 1981 solely because of incentives created by variations in the price of recreation goods,” explains Gonzales-Chapela.
These findings suggest a new explanation for the different patterns of work and leisure observed in the U.S. and Europe since the 1970s. Should the behavioral response found in this study using U.S. data be similar in European countries, the price of recreation goods would contribute towards explaining the increase in the market hours gap between the U.S. and Europe.
An official publication of the Society of Labor Economists and the Economics Research Center/NORC, the Journal of Labor Economics presents international research that examines issues affecting the economy as well as social and private behavior.
Jorge Gonzales-Chapela. “On the Price of Recreation Goods as a Determinant of Male Labor Supply,” Journal of Labor Economics 25:3.
Journal
Journal of Labor Economics