ISSN: 1391 - 0531
Sunday December 16, 2007
Vol. 42 - No 29
Financial Times  

Housewives’ (and also house-husbands’) contribution to GDP and the economy

It appeared that the battle of the sexes had started around the dinner table and I, as a non-combatant, had to run for cover for my own protection. It all started when one woman innocently inquired from other women present whether they saw the latest ad inserted by a group called ‘Protectors of Women’s Rights’ in the papers.

“Yes, I saw it,” another woman responded. “It’s great. It draws the attention of all of us to the sad state in which we women are living. We contribute so much to GDP as housewives, mothers and welfare officers of the household. But, the official statistics don’t reflect our contribution.”

This comment seemed to have irritated the man seated next to her. Very quickly he posted himself to the battle front. “What’s great about it? You people have been saying this all the time. But everyone knows that it’s your duty and you are well rewarded in the house for your services. You can’t claim additional credit for that.”

His intervention triggered an uproar and then all hell broke out. It was apparent that both men and women were united against each other and ready to battle till one party could completely crush the other. When things went out of control, our host looked here and there helplessly. When he cast a pleading look at me, I guessed that I had no choice, but to mediate.

“All right! All right!” I shouted. “Both you groups are right. But, there’s much more behind what each one of you’re claiming.”

There was an unmistakable sign of resentment on their faces about my intervention. But I continued. “Official statistics popularly known as gross domestic product or GDP data measure the value of total goods and services produced in a country. They follow a standard method adopted throughout the world so that the data series is consistent from year to year and comparable from country to country. It’s dangerous to change the system simply to satisfy individual likes and dislikes,” I said.
“That’s precisely our point,” the woman who started the debate, interjected. “We want the system to change, so that we’re also reckoned as valuable contributors to the national wealth.”

“You have a point,” I said. “But, the inclusion of the services of housewives or, for that matter, even house husbands, in GDP data may result in a negative contribution to GDP. So, instead of raising wealth, you may well end up reducing it.”

The faces of all the men and women turned to me at this unexpected revelation. “What do you mean by that?” another woman queried. “How come a product which we really produce could become a negative contribution?”

“It’s like this,” I said, starting a long lecture. “When we calculate GDP, we have to be careful not to count the same thing again and again. If we do so, we simply multiple-count output and overestimate the value. This is because, when we count a final product for GDP, it has already passed several intermediate stages - like bread containing production and milling of wheat grain, transportation of flour, etc. So, instead of taking the full value of the product, we take only the new contribution made at each stage. Economists call it value addition. So, the whole GDP is the total of value additions at different stages”

“How can that lead to a negative contribution by housewives? They still create a product enjoyed by the whole family,” another woman inquired. All their faces looked incredulous, for what was being told was contrary to what they had believed. “We’ve to take the entire household as a production unit. All the people in the household, including the cats and dogs, contribute to produce something that adds to the welfare of all the members.”

“That’s interesting,” a man exclaimed, “Dogs and cats contributing to the welfare of a household!”

“No kidding,” I said. “Cats may catch mice and dogs may guard the house. If you buy these services from the market, you’ve to pay for them. Even if they simply function as pets, they still help us to reduce our stress and save us a trip to the doctor.”

Now everybody started to listen to me attentively. “Forget the extreme example of cats and dogs which I mentioned in lighter vein. Everyone in a household makes a contribution to its welfare. Look at a husband in a modern house. He performs multiple functions for which he’s not paid. Security officer, family driver, errand boy, purchasing officer, bill payment boy, financier and so on. Like a housewife, no end to his work! Similarly, children also help by going to the boutique, cleaning the house, washing and feeding dogs and cats. So, everybody in a household contributes one way or the other to the welfare of the family. It’s not only the housewife who does that. Everyone does! Our problem is to reckon all these contributions when calculating GDP.”

“How does this negate the work of housewives?” a woman, fought back. “Not only the housewives. It applies to the work done by all of us, men, women and children,” I continued. “Suppose a woman cooks a pot of rice. According to you, the value of the whole pot belongs to her. But, it isn’t the case. She has got from outside many inputs to cook it. For example, rice, gas, water, cooking utensils, kitchen, etc. would have been provided by someone else, say the husband. So, the woman cooking has a right only to the value she has added and not everything. We’ve to assign a value to her contribution. But, we run into a serious problem when we do so, in the absence of a market determined price. So, our valuation becomes an arbitrary one, most often based on our likes and dislikes” No one interrupted me, so I continued. “We can take the market price as a proxy for the value of cooked rice and go on deducting everything from that value to find what’s left for the housewife. But, markets are mass producers and, therefore, prices are lower than the aggregate of the cost of inputs that we use in our kitchens. In that case, her contribution is negative and it leads to a reduction of GDP. So, it’s sometimes inadvisable to reckon the services of housewives for calculating GDP.” Men were now looking at me triumphantly, so I warned them too. “This is equally valid for the work done by house husbands as well. So, no cheers for you men-folk!”


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