My favorite “ideologue” of the George Mason University Department of Economics is Bryan Caplan. Not only does he appeal to my taste for iconoclasm, but he backs his moral and empirical claims with insightful arguments. This is partially due to Bryan’s tendency to diversify his research with perspectives from domains outside of economics (Caplan, 2018, xiii). One such example can be found in his recent book entitled Labor Econ Versus the World in a featured essay called “The Grave Evil of Unemployment” (Caplan, 2022, p. 18); Caplan uses research from positive psychology to show that policies that create unemployment have a particularly harmful effect which cannot merely be undone with transfer payments.
Yet on further reflection, simple cost-benefit analysis grossly understates the horrors of unemployment. We should also consider the effect of unemployment on happiness. When workers don’t get a raise, they’re often disappointed or angry. But when workers lose their jobs, they literally weep. For most of us, a job isn’t only a paycheck. A job also provides a sense of identity, purpose, and community. Happiness research strongly supports this fact, but introspection should suffice. Think about the shame and despair you’d feel if you were suddenly unable to support your children.
Caplan explains in the linked article “The Joy of Market-Clearing Wages” that life satisfaction research indicates that being employed is an important contributor to happiness. The gains from considerable increases in income are smaller than the gains from going from unemployed to employed. It’s not so much about money as many would expect.
1. Once you reach a modest standard of living, additional income does not increase life satisfaction very much. Marginal utility of wealth decreases rapidly – maybe even more rapidly than you thought. (Having been a happy grad student on $6000/year, it’s not more rapid than I thought).
2. Unemployment per se has a large effect on life satisfaction. If you compare two people with equal incomes, one employed, one unemployed, the unemployed one is typically a lot less happy.
Just to get a feel for these results, Donovan and Halpern report (Chart 11) that about 80% of people in almost every occupational category is “fairly” or “very” satisfied with their lives. Manual laborers and white collar workers are nearly equal in satisfaction. Managers are a bit higher, around 90%. But the unemployed are fully 20 percentage points less likely than most workers to be satisfied with their lives.
Suppose, then, that labor market regulation could raise the incomes of manual laborers up to the level of white-collar workers. That’s a big change, but the extra income would probably add at most 1 percentage point of life satisfaction. If a side effect of the regulation was increasing the unemployment rate by 5%, however, this gain would be exactly balanced by the decreased satisfaction of the unemployed. And this is true even if we ignore all of the other side effects of the regulation – from extra taxes to pay for extra workers on the dole, to higher prices from restricted supply.
Although I had heard this from Caplan previously, he also noted the importance of social relationships in a recent interview with Richard Hanania of the Center for the Study of Partisanship and Ideology (CSPI). Other relevant information I found from Donovan and Halpern (2002) lent credence to this claim.
One reason why leisure activities are thought to increase well-being is because they allow people to switch off mentally. Another reason has been found to be the social aspects of sport, exercise, community participation and religion. In fact, a consistent theme of research into life satisfaction is that social relationships are very important. Having friends, supportive relatives, work-mates are all correlated with satisfaction either with life overall or with one’s job. (Argyle, 1987, ch. 2)
A common experience during the COVID-19 pandemic was the feeling of loneliness because many people were socially isolating themselves from others and not making any face-to-face contact whatsoever. If social interactions are one of the most critical aspects of our life, it makes sense that people would begin feeling depressed. Many people were not even permitted to go to their office jobs, and they began working from home.
Work from home has several benefits, possibly including increased societal productivity and wealth (Hanson, 2020). It will likely permit foreign workers to reap some of the rewards of more easily integrating into developed countries’ economies, and citizens of these countries will benefit from cheaper labor costs. Many workers already in developed countries may enjoy the benefit of avoiding commuting which some researchers have found is associated with lower job satisfaction as well as “increased strain and poorer mental health” (Clark et al., 2019). Many people commute because it affords higher wages, but if high wages can be had while avoiding commuting, many workers may find that preferable.
Working from home also allows employees to live in low-cost-of-living areas while receiving wages equivalent to their colleagues in high-cost-of-living areas. But this arbitrage will not last forever if work from home continues to be popular. Parents that work from home may refrain from hiring a babysitter or taking their child to daycare, but opt to watch them while working instead. Working from home provides several conveniences that working from the office lacks: being at home is more comfortable; it offers the opportunity to sleep in later; it doesn’t require wearing dress clothing; it allows for more slacking off because workers can’t be closely monitored. A 2022 Pew Research Center report highlights the popularity:
The impetus for working from home has shifted considerably since 2020. Today, more workers say they are doing this by choice rather than necessity. Among those who have a workplace outside of their home, 61% now say they are choosing not to go into their workplace, while 38% say they’re working from home because their workplace is closed or unavailable to them. Earlier in the pandemic, just the opposite was true: 64% said they were working from home because their office was closed, and 36% said they were choosing to work from home.
For those who do have access to their workplaces but are opting to work mainly from home, their reasons for doing so have changed since fall 2020. Fewer cite concerns about being exposed to the coronavirus – 42% now vs. 57% in 2020 say this is a major reason they are currently working from home all or most of the time. And more say a preference for working from home is a major reason they’re doing so (76% now vs. 60% in 2020). There’s also been a significant increase since 2020 (from 9% to 17%) in the share saying the fact that they’ve relocated away from the area where they work is a major reason why they’re currently teleworking.
Despite many preferring working from home, many still decide to go to work. Among those who are not working from home but are able to, 61% feel more productive when they are working at their workplace and consider it a major reason, while 16% consider it a minor reason. The survey also found that 32% of adults who choose to work from home cited childcare responsibilities. However, as we might have predicted, a major source of social interaction is lost when working from home.
If one of the most important aspects of one’s life is social relationships and people spend eight hours a day working five days a week, working from home could mean significantly less social time. It is challenging to have a relationship through a computer screen. It also means that social events after work and developing friendships with workmates are significantly less likely, especially if the office begins hiring people who do not live in the nearby area.
Many people’s lives will be made better by working from home. I wouldn’t necessarily say that it is a bad thing, and I think that people shouldn’t outright reject it. I do believe that losing a large number of social interactions may inadvertently lessen the quality of a person’s life. These sorts of changes may be challenging to detect, as are other tradeoffs between convenience and social benefit. You might slowly feel less happy but not attribute it to working remotely.
Many people spend too much time playing video games, watching Netflix, and browsing Twitter. Although it would take extra effort and possibly be unpleasant at the time, exercising, socializing, and working on long-term goals will likely make people happier. It can be difficult to bring one’s short-term impulses in line with long-term well-being. I think that many people should consider the possibility that despite the convenience of working from home, it may contribute negatively to one’s overall mental well-being sometimes.
I think I endorse basically all of this.
I started working from home due to some family obligations a few years back; the move preceded covid. All of the following are personal observations; some of them may not generalize:
- Efficiency is much worse at home. There are just a lot more distractions at a home office than at an office office.
- Hours are longer. Part of this is making up for the efficiency hit with more hours. The rest is a problem I think a lot of highly conscientious people are going to have with WFH: the work is RIGHT THERE. If you've got a deadline coming up and you're 15 feet from your computer, it's tough to justify not hopping on to get a couple more hours work in. If you'd have to drive across town and open up the building to get more work in, well... it can wait a day.
I've had to get around this by basically making the home office as much like an actual office as possible. I dress in the usual khaki and polo shirt engineer uniform, block a bunch of websites during the day, don't do any work around the house during working hours etc.
To help with the social isolation, I've had to take up a pretty social hobby on a set schedule that gets me out of the office/house and keeps me in at least decent shape.
Keeping the hours worked from getting out of hand is a problem I haven't completely solved and possible won't.
The US has one of the highest uses of antidepressants worldwide. Less human interaction and more alone screen time, even if work-related, is bound to exacerbate this.