# Why isn't unpaid labor included in GDP **URL:** \ **Category:** Factual Questions\ **Created:** [January 17, 2013, 7:21am UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482 "2013-01-17T07:21:59Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [January 19, 2013, 5:30pm UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/21 "2013-01-19T17:30:24Z")
> [@Freddy\_the\_Pig](#): > > It isn’t my logic, it’s the logic of economists who developed this statistic. THEIR logic is that most services which people provide for themselves and their families are (a) difficult to measure; (b) difficult to value, because there is no buyer and seller; (c) not really part of the economic sphere of human activity; and (d) of little interest to policy makers and others who use macroeconomic statistics. I agree with all that. But it’s not what you said before. What you said before was that since Bob isn’t willing to pay someone to mow his own lawn, and does it himself, that means it has no value, and we have to “trust him” that it has no value. That’s simply untrue. Neighbor A and Neighbor B may value a mowed lawn exactly the same, but since Neighbor A is a lawyer and Neighbor B is unemployed, A pays a service and B mows his own lawn. It’s the different opportunity costs that determine their actions, not how much they value the mowed lawn. Hell, neighbor B may well value a mowed lawn more, because he’s home to look at it all damn day. GDP is not a perfect measurement. That’s fine. It’s certainly close enough for what we use it for. There’s absolutely no need to develop elaborate models that take into account non-market activities. But saying that non-market activities aren’t counted because they aren’t as valued as identical activities that do enter the market is not correct. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [January 19, 2013, 5:32pm UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/22 "2013-01-19T17:32:56Z")
> [@Hellestal](#): > > Housing is counted both ways. Maybe this is what you meant with your post, but to make sure: > > Building a new house is an investment, and it’s counted in the investment portion of GDP in the same sense that building a factory is counted as investment. After the factory is built, the products the factory makes will also be counted as part of GDP as consumption goods. The same sort of thing applies to a house. It’s built as an investment good, and after it’s operational as a dwelling, it creates a flow of consumable resources, namely, the ability to live in that house. This flow of value is included in GDP as consumption, consumed rent, calculated either from direct rent numbers or from guesstimates of imputed rent in the case of owner-occupied housing. As far as economic measurements go, building your own house can be seen as essentially identical to investing in a small factory, and then consuming the entire output of that factory yourself every month you live in it. > > First a single large burst of investment, then continual consumption over the lifetime of the structure. I used to use this exact same analogy with my kids. They still struggled with it because they have never seen a factory. Now I talk about building a disco that will go on to produce entertainment. Disco:entertainment:🏠housing. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [January 20, 2013, 4:39am UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/23 "2013-01-20T04:39:02Z")
> [@MandaJo](#): > > I used to use this exact same analogy with my kids. They still struggled with it because they have never seen a factory. Now I talk about building a disco that will go on to produce entertainment. Disco:entertainment:🏠housing. And that works better? Interesting. > [@MandaJo](#): > > I think the real answer is because it’s always been this way, and since we mostly care about (real) GDP for making comparisons, if we started adding imputed production, we’d just have to adjust it back out for “really real GDP”. I vacationed in Australia last year and went to the penguin parade on Philip Island south of Melbourne. (Which is totally awesome, by the way. It’s just penguins going home, very simple but still totally worth doing.) They have a guy in a booth with binoculars and a little clicker, counting how many penguins come home every evening. They said there could be more accurate ways of counting, but this is the traditional method and they continue with that method to have continuity with past numbers. That’s almost definitely a relevant idea for GDP, too. Of course, if people feel the problem in measurement becomes big enough, they often do small tinkering, like they’ve done many times with unemployment calculations. > [@MandaJo](#): > > You don’t make sunglasses with money. How would that economy be less productive if 365 people make themselves a pair of sunglasses? > > Or, to put it another way, if me and my neighbor make a pact to pay each other $100,000/month to mow each other’s lawns, when before we were doing our own, how does that represent any sort of real change in the economy? Pretty sure **jtgain** was trying to get across the idea of velocity of money with that example. Pretty sure. He was talking about personal production being real production in the first paragraph, then switched gears to talk about the flow of money after that. It all seemed solid to me, anyway. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [January 20, 2013, 5:24am UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/24 "2013-01-20T05:24:21Z")
> [@Hellestal](#): > > And that works better? Interesting. If you’d like, you can draw all sorts of conclusions from the fact that they better understand the idea of entertainment as a product than widgets. > [@](#): > > I vacationed in Australia last year and went to the penguin parade on Philip Island south of Melbourne. (Which is totally awesome, by the way. It’s just penguins going home, very simple but still totally worth doing.) They have a guy in a booth with binoculars and a little clicker, counting how many penguins come home every evening. They said there could be more accurate ways of counting, but this is the traditional method and they continue with that method to have continuity with past numbers. That’s almost definitely a relevant idea for GDP, too. > > Of course, if people feel the problem in measurement becomes big enough, they often do small tinkering, like they’ve done many times with unemployment calculations. According to McConnell/Grue, we still estimate farmer-consumer agricultural production. I think that’s another good example of how this is more about stability than anything. I am sure that, once upon a time, excluding that would have been a meaningful distortion. But today? Surely it’s not as large a number as self-mowed lawns. And it’s less prone to economic fluctuations: in a downturn, lots more people start doing their own lawn care than growing their own crops. > [@](#): > > Pretty sure **jtgain** was trying to get across the idea of velocity of money with that example. Pretty sure. He was talking about personal production being real production in the first paragraph, then switched gears to talk about the flow of money after that. It all seemed solid to me, anyway. Fair enough. I thought he was arguing that we exclude non-monetary transactions from GDP _because_ they do not contribute to the velocity of money and we want the GDP number to reflect “economic activity”. I think it’s important to remember what GDP is and isn’t: it’s a measure of production. It’s not a magic rating of your economy. ---
**Author:** ![ruadh](https://avatars.discourse-cdn.com/v4/letter/r/d2c977/32.png) [@ruadh](https://boards.straightdope.com/u/ruadh)\ **Post date:** [January 20, 2013, 9:55am UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/25 "2013-01-20T09:55:40Z")
> [@DrCube](#): > > Do you really think women are the only people who do unpaid work in the home? Of course not, and nor did I say they were, but it’s not really a matter of dispute that women do the bulk of it. > [@](#): > > Do you think their work is currently unrecognized? By who? By those who count GDP, which is what this thread is about. Again, not a controversial statement. > [@](#): > > And how in the world will it cause capitalism to collapse? Capitalism in general depends on paying people less than the full value of their labour. This surplus value is how capitalism makes its profits. Women’s unpaid work in the home isn’t unique in this respect, but it is significant for the sheer volume of it. Think of what it would cost if, instead of Mom doing the cooking, cleaning, child-rearing, etc. for no financial reward, all this work was treated as a service that must be paid for. The implications of this would be enormous - first, obviously, millions of people would receive wages for things they hadn’t previously received wages for; secondly, those who were already receiving wages for these things (domestic servants, nannies etc) would see their wages rise as they would no longer have to compete with unpaid labourers; and thirdly it’s likely that women’s wages for non-domestic work would also increase, as the justification for paying them less would evaporate. All this would add up to an absolutely gigantic wage bill for women’s labour. It’s all theoretical, so it could be going too far to say that it would actually cause the \*collapse \*of capitalism - but it’s hard to see how it could survive in its present state with the loss of such a monumental chunk of its profits. Which is precisely why demands that women be paid to do housework are so strenuously resisted. ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [January 20, 2013, 10:21am UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/26 "2013-01-20T10:21:26Z")
I’ve a problem with much of the upthread. I think people have missed a basic point: the stuff people do at home - cooking, cleaning, childrearing, mowing the lawn - is all prep-work for the wage-earner(s). So surely it’s already included in GDP? Silly example: I can’t turn up to work naked. I could employ a valet to dress me and a boot-boy to shine my shoes, but I do both myself. ---
**Author:** ![Nava](https://avatars.discourse-cdn.com/v4/letter/n/da6949/32.png) [@Nava](https://boards.straightdope.com/u/Nava)\ **Post date:** [January 20, 2013, 10:49am UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/27 "2013-01-20T10:49:58Z")
> [@jtgain](#): > > But who would ever actually exchange the money? If I owe you $100 and you owe me $100, we just call it even. We don’t go through the motions of writing each other checks. This exposes a potential flaw in GDP calculations, but since it doesn’t happen in real life, it’s not really a flaw. Oh, but companies and organizations often do it. Compensating debts is an option but sending both checks does happen. I’ve had clients who refused to compensate because it was less straightforward than two checks, specially since the two amounts are highly unlikely to be equal. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [January 20, 2013, 12:31pm UTC](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482/28 "2013-01-20T12:31:08Z")
> [@Quartz](#): > > I’ve a problem with much of the upthread. I think people have missed a basic point: the stuff people do at home - cooking, cleaning, childrearing, mowing the lawn - is all prep-work for the wage-earner(s). So surely it’s already included in GDP? > > Silly example: I can’t turn up to work naked. I could employ a valet to dress me and a boot-boy to shine my shoes, but I do both myself. If that were the case, though, we wouldn’t count it when actual valets and boot-boys gets paid, but we do. [Previous page](https://boards.straightdope.com/t/why-isnt-unpaid-labor-included-in-gdp/647482.md?page=1)