Maybe it’s my anticipation to read The Leading Indicators (right after Piketty, that’ll be a breezy one, right?); maybe it was listening to the Planet Money podcast on Kuznets; or maybe it’s just because it’s Friday, but the question popped into my head this morning – how much is the nonconomy worth?
The boundary between what is and is not “the economy” is both a very well-defined and a very fuzzy one; the NIPA Handbook does a very nice job explaining the division criteria but the more you muse over them the more they reveal themselves as pragmatically arbitrary with a dash of “I know it when I see it.” Which is all fine and useful but still means that all the stuff that’s not “the economy” is not only, you know, the stuff of life, but also just as measurable and worthwhile to measure. Because I am a giant nerd, I have decided to measure it. Because I am decidedly not a one-man BEA, this is going to be pretty back-of-the-napkin stuff. All data 2012:
Americans worked 230 billions hours in 2012. There were 314 million Americans in 2012, so they experienced roughly 2.75 trillion hours. Which means the economy took up ~8% of American time in 2012.
But that’s a little unsatisfying, for the following reasons:
1) It includes retirees and children.
2) It neglects the question of sleep.
3) It neglects the question of work-supporting activities, like commuting. I’m going to exclude them from the nonconomy for now.
So let’s pinpoint working-age Americans, of which there were ~201mm in 2012. Let’s assume that, of their total time spent existing, they spend 1/3 sleeping and another 10% in work-support (the average round-trip commute is roughly an hour, and I rounded well up to encompass all the other little things that shouldn’t be lumped in with the nonconomy with that definition. That leaves us with a pool of ~1 trillion hours pretty much exactly; subtracting the 230 billion hours working, Americans spent 770 billion hours in 2012 laboring in the nonconomy.
How to attach a number? Simplifying assumption: output-per-hour is the same in the nonconomy as in the economy, so you just divide GDP by hours worked. In 2012, that was just around $70/hr; multiplied by 770 billion, you discover the nonconomy was $53 trillion in 2012. Let’s use a sophisticated data visualization to compare:
GDP is Gross Domestic Product; GDA is Gross Domestic Awesome.
If anything, this is a substantial undermeasurement, because old people count too! And since by this calculation they don’t work at all, they would be contributing an additional 200 billion hours to the nonconomy, which is another $14 trillion of nonconomic activity:
Just a little perspective on life and the economy on this new-jobs-number Friday.