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Continued: If fun counts, 'living standards' are actually pretty high

  • Article by: VIRGINIA POSTREL , Bloomberg News
  • Last update: December 5, 2013 - 2:09 PM

To measure how changing entertainment options have affected real living standards, what we’d need to know is how much money you’d have to pay each person to make them just indifferent between the entertainment they consume today and the entertainment they could have consumed in the past. What people shell out today for, say, cable TV or Netflix subscriptions is almost certainly a small fraction of that total value — yet it’s the only value official statistics pick up. The result is most likely a significant underestimate of improvements in economic well-being.

Consider a different hard-to-measure change: the increasing variety of imported goods. In a 2004 article, the economists David E. Weinstein and Christian Broda estimated that consumers would be willing to pay $280 billion a year — about 3 percent of gross domestic product — just to have access to the variety of foreign goods that were available in 2001 vs. 1972. That’s a big number.

New entertainment options are particularly important to poorer people with ample leisure time. (Those working two or three jobs are a different matter.) That’s because, as income falls, the time devoted to leisure goes up, even among fully employed people.

For workers with one full-time job in 2012, those in the bottom income quartile, with weekly pay of $530 or less, averaged about 4 hours and 25 minutes a day in leisure activities, including 2 hours and 36 minutes of television. By contrast, those in the top quartile, making more than $1,291 per week, spent 3 hours and 49 minutes at leisure, including an hour and 55 minutes of TV. Entertainment, whatever its source, isn’t a luxury.

“Too many people presume that what the poor want from the Internet are the crucial necessities of life. In reality, the enchantment of the Internet is that it’s a lot of fun,” the Indian journalist Manu Joseph observed in a September New York Times essay. “And fun, even in poor countries, is a profound human need. Quality of life is as much an assortment of happy frivolities as it is the bare essentials of survival.”

What’s true in India is equally true in the United States. Fun matters, even if it’s hard to measure.

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