As culture has evolved, so has the way we spend our leisure time. Dr Severine Toussaert investigates how the evolution of technology has impacted our leisure time – and how the digital economy affects the leisure economy.
The digital economy has a tremendous impact on our lives, including the way we allocate our time to various activities. Think about the amount of time you spend on your screen(s), whether it is a smartphone, a desktop or lap computer, a tablet, and of course, a TV (possibly connected to a video game console). In a 2019 UK survey, respondents reported using their phone an average of nearly 3.5 hours per day (and nearly 4 hours for the 16-24 year olds). One consequence of this phenomenon is that our time, our attention and our personal data have become incredibly valuable assets for businesses.
To understand the profound impact that the digital economy has had on our leisure time and the type of activities we pursue, let’s first think about how the discipline of economics conceptualises leisure. In economics, we study how to best allocate scarce resources with alternative uses (see Robbins [1932] and a discussion here). One scarce resource we have is time, which for simplicity we assume can be spent on two broad categories, work and leisure. Time allocation decisions have been studied in economics for a very long time, especially since the influential paper of Gary Becker (1965). Like any other good, leisure has a price (“there is no free lunch” for an economist). What is the price of an hour of leisure? It is the opportunity cost of giving up one hour of (hopefully productive) work.
Technological change has had a profound impact on the way we allocate our time between work and leisure, by lowering the time cost of performing certain activities and also by creating new needs. Indeed, several recent empirical studies have documented a decline in the average number of hours that people work and the corresponding rise in leisure time (Aguiar and Hurst 2007, Boppart and Krusell 2016). Technologies such as video games have had a real impact on hours worked. For instance, a recent study estimates that innovations in video/computer games since 2004 explain about 50% of the increase in leisure among young American males.
What is so special about technological change and the leisure economy? First, a lot of leisure technologies are supplied free of charge. Think for instance about Facebook or WhatsApp. Second, these services are non-rival, that is, your use of the technology does not prevent your friends from using it. In fact, there are network effects: your willingness to use these services increases with the number of people in your network that use it. Finally, those services are designed specifically to draw in users because their time and attention can then be sold to advertising firms (again, there is no free lunch!). The sector has encountered a large growth, with the top six world largest companies being Apple, Alphabet, Microsoft, Amazon, Facebook, and Alibaba. With the availability of big data and the use of sophisticated machine learning techniques, the sector will likely continue to grow in the foreseeable future.
Does this technological change make us better off? For instance, what would you say is the impact of Facebook on your well-being and how much would we have to pay you not to use it? A recent study tackled this question and found that users requested an average of $100 to deactivate their account for 4 weeks, suggesting they value the platform a lot. However they also reported significant improvements in their well-being after such a detox period. Has the digital economy become too successful?
Your task
What are the various ways in which the digital economy affects your life? How would you assess the overall impact of the digital economy on your schoolwork? Write a 300-word essay in which you consider these questions.
Dr Severine Toussaert, Tutorial Fellow in Economics
I am an experimental economist interested in behavioral decision theory and applications to health. I was extremely lucky to do a PhD in economics at New York University. In fall 2018, I joined the University of Oxford as associate professor at the Department of Economics and tutorial fellow at St John’s College. Until May 2018, I was assistant professor of behavioral science at the London School of Economics.