Bondage

After a very enjoyable week of staycationing, I'm back at work. And it hurts. Which makes me wonder: is there an economic case for high house prices and university tuition fees?

To see my point, consider this paper by Alex Bryson and George MacKerron. They show that I'm not unusual. They asked people at random times of the day how happy they were and what they were doing. They found that people were much less happy when they were working. In fact, of the 40 activities considered, only being ill in bed made folk more miserable than work*.

But here's the thing. This isn't because they sampled people in rubbish jobs. People in this survey had a median income of over £40,000 a year - suggesting they had "good" jobs". And in fact, those in low-paid work reported less unhappiness at work than those on six-figure salaries.

What's going on here? Here's a theory, based on a paper by Katharine Guthrie and Jan Sokolowsky. It's to do with opportunity cost. If you're well off, the opportunity cost of work is high; you could be enjoying your nice home or playing golf. Whilst we're at work, we are aware of this cost and so feel unhappy.

This explains my current dissatisfaction; my staycation reminded me of the more enjoyable things I could be doing and so made opportunity cost especially salient. And it explains why the low-paid feel less unhappy at work; if work merely gets you out of a dingy flat on a sink estate and can't afford some leisure activities, the opportunity cost of work is lower than if you lived somewhere nice.

This misery of work could in principle encourage people to take early retirement**. Of course, we've not seen this recently - but that's because low investment returns have forced people to stay in work. However, a combination of returns reverting to something like normal, allied to an ageing workforce, could well drive people to quit work.

This is where high house prices and tuition fees enter the story. Those of us who got a free education and cheap(ish) houses in our youth have been able to save for our retirement - some have actually saved too much - and so could drop out soon; I reckon I would have done so already but for lower returns. However, the generation below me - burdened by high rent and student loans - will be less able to save for an early retirement. They will, in effect, be trapped into debt bondage.

In this sense, high house prices and university tuition fees have an (unintended) effect. They will help sustain the labour supply in 30 years time. And they will reduce the need for hierarchical capitalism to reform itself to improve job satisfaction in order to retain dissatisfied 50-somethings. It's surprising how many ways capitalism has of reproducing itself.  

* This is consistent with the fact that the employed are happier than the unemployed. There's a difference between experienced happiness and remembered happiness. The enjoyment we get from work consists not in doing it but in having done it.  

** Bryson and MacKerron find no relationship between age and the misery of work. I suspect this is because although older folk do more enjoyable work than young folk - remember the grunt work you did as a graduate trainee? - they are more aware of the opportunity cost of work, and the two effects cancel out.

Comments

[Andreas Paterson]

Yep, our innovative capitalist system has managed to come up with Slavery 2.0

[Ben]

Christ, you reckon Einstein. My theory on boomers: when you are on the wining side of a massive con you don't question it.

[Bamber]

But isn't staycationing going to become increasingly enjoyable as technological goods because even better and more affordable? £15 to download an entire series of Game of Thrones from Amazon.

Maybe today's young people who dream of an early retirement will simply forgo having children?

[Luis Enrique]

OK so order of priorities

1. slash housing costs
2. introduce BI

[Dave Timoney]

I'm not sure it is correct to say that the relationship between house prices and student debt on the one hand and the labour supply on the other is "unintended".

If longevity is increasing, then it makes sense for capital to extend working lives and thus increase its share of the surplus of lifetime labour. Some of the changes this gives rise to, such as the pushing back of the state pension age, are clearly deliberate (regardless of the dubious claims about pension affordability).

Student debt is obviously a claim on future labour (hence the mechanism for repayment), but so too is the cost of housing. The gradual increase in mortgage terms since the 1990s (25-year terms have declined from 70% to 30% of new mortgages, with a quarter now being for 30 years or more), is a key factor in the continued rise in house prices.

[Milfs, Gilfs and Jailbait]

Having just spent an all inclusive week in the sun this article chimes with me. I am always more miserable after coming back to work after a good holiday. I would certainly want to retire the earlier the better.

I will try to avoid staycationing as it may make me hand my notice in!

[Ben]

From arse to elbow - you got it. All productivity gains have been soaked up by housing costs paid over a lifetime. By simply allowing unlimited credit plus a "free" market in housing where supply is deliberately capped below demand we have an inevitable rise in prices until they top out at the total income earned by a person over their lifetime.

Forget how much it costs to build - the price of land is where it's at. The price is set at the maximum it's possible to extract from labour. Work harder or be more efficient - it goes up.

There is no point working hard in the UK. Or asking for a minimum wage rise. It all goes to land owners.

[NoniMausa]

And people's working lives are not longer - or not much longer - than they were 20 years ago. By the time we hit traditional retirement age, ~65, we may have more of a lifespan ahead of us, but like an old used car we also have an increasing number of glitches that need fixing or which limit what we can undertake. In a tight job market, who is going to hire a grumpy senior with arthritis and a variable memory, over a youngster whose energies and hopefully memory are at their peak, but a still too young to have learned the cynicism of the much downsized and lied-to?

Our new manager bounced in last summer with promises of bonuses and special treats if we hit certain sales targets. He is thirty. We, in contrast, range in age from the late fourties to early sixties, and tried our best to humour him, but we knew that shortly he would learn that his bosses would never come through with any of those goodies. But in the meantime, they had induced him to work as hard as if the store was really his own. Poor kid.