The Role of »Informal« Activity in Household Economic Behaviour [1 ed.] 9783428471577, 9783428071579

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JAMES CECORA

The Role of 'Informal' Activity in Mousehold Economic Behaviour

Beiträge zur Ökonomie von Haushalt und Verbrauch Begründet durch Prof. Dr. Erich Egner Herausgegeben von Prof. Dr. Rosemarie von Schweitzer, Universität Gießen und Prof. Dr. Klaus Hesse, Universität Kiel

Heft 22

The RoJe of 'Informal' Activity in Household Economic Behaviour

By

James Cecora

Duncker & Humblot · Berlin

Die Deutsche Bibliothek - CIP-Einheitsaufnahme

Cecora, James:

The role of "informal" activity in household economic behaviour I by James Cecora. - Berlin: Duncker und Humblöt, 1991 (Beiträge zur Ökonomie von Haushalt und Verbrauch; H. 22) ISBN 3-428-07157-3 NE: GT

Alle Rechte vorbehalten © 1991 Duncker & Humblot GmbH, Berlin 41 Fotoprint: Werner Hildebrand, Berlin 65 Printed in Gennany ISSN 0522-697X ISBN 3-428-07157-3

To my parents in formal recognition of many years of 'informal' inputs

Preface 'lnformality' usually has a pleasant connotation, suggesting relaxation and a Iack of constraints; for the economist, however, 'informal activity', in the sense of unobserved or unregistered economic transactions, rather incites discomfort and the need to remedy a Iack of information. By filling in some of these gaps with empirical data on hausehold economic behaviour, the author hopes to contribute to better insights into the functionning of society's most elementary economic and social entity: the family household. The survey upon which this study is based was carried out by the Institute of Structural Research of the West German Federal Agricultural Research Centre in Braunschweig-Völkenrode with joint funding by the Research Centre and the Federal Ministry of Agriculture in Bonn. In addition to bis gratitude for this financial support, the author wishes to express bis sincere appreciation to Prof. Dr. E. Neander, director of the Institute of Structural Research, and to the highly professional members of the research 'task force', i.e. to Prof. Dr. H. SchulzBorck, whose methodological experience - especially in the fields of evaluation and time-budget studies - was invaluable, and to H.-J. Günther, whose speed and precision in programming and data management were a reliable foundation ofourwork. The survey was very demanding on the participants and we thankfully acknowledge their conscientious and steadfast cooperation. Their frankness and hospitality towards our research team will not be forgotten. We are also indebted to the Agricultural Chambres in Hannover and Weser-Ems for their help in establishing contact to the sample households.

Braunschweig, Mai 1990

J. Cecora

Table of Contents Prerace .......................................................................................................................................... 7 0 Introduction: ...................................................•.......................................................................... 13 0.1 General context of the subject matter ............................................................... ................... 13 0.2 Objectives and methods of our empirical investigation ....................................................... 15 0.3 Definition ofterms ............................................................................................................... 16

1 Household Bebavlour in Economlc 'lbeory ........................................................... ................. 23 1.1 1bree modules: state, enterprises, households ..................................................................... 24 1.2 Factors influencing non-market production by members of private households .............. ............................................................................................. 27 1.3 Choice theory and resource allocation ................................................................. ................ 30

Z Private Households ln Publlc Statlstics ............................................................................... ... . 33 2.1 Depiction of households in generat administrative statistics: National and international accounts ................................................................ ..................... 33 2.2 Statistical instruments in the Federal Republic of Germany ............................................... 36

3 lntormal Ecooomic Adivlty or Private Households in the Ught or Emplrlcal Research ..................•............................................................................................... 41 3.1 Macro-economic investigations for evaluation purposes in administrative statistics ...................................................................................... .................. 42 3.2 Behavioural research on household 'informal economic activity' ....................................... 44

3.3 Unanswered questions and hypotheses ................................................................................ 49

10

Table of Contents

4 Design and Implementation or a Sunrey on Household Economic Behaviour and lts 'Inr01'1Dal' Aspects .................................................................................... ................... 53 4.1 Tbeoretical concept .............................................................................................................. 4.2 Selection of the survey sample, survey design and implementation ................................... 4.2.1 Selection of the survey sample .................................................................................. 4.2.2 Survey design and implementation .........................................•..................................

53

57 58

59

4.3 Classification and evaluation of survey data ....................................................................... 63 4.3.1 Categories of time-use ............................................................................................... 64 4.3.2 Evaluation of time-use .......................................................................... ..................... 67 4.3.3 Classification of the inoome and allocation of nominal and real goods •.••••••.•...•.•. .•.•....•...•••.......................••....•......•.........•••........... ..•............. 70

4.3.4 Evaluation of the inoome and allocation of nominal and real goods •........•.....••..................•.•........•..•.•.......•......••....•••..............•...........•.••... 70

5 Survey Results ...................................................................... .................................... ................. 73

5.1 Utility value and allocation of hausehold income in nominaland real g A discussion of current trends in the division of eronomic functions between the three

collective agents can be found, among others, in Hesse 1982 and Watz 1988.

• Zeppernick notes for the Federal Republic of Germany a remarkable increase in transfer income which significantly exceeded the growth rate of the national income. See Zeppernick 1988. Hesse presents a review of family supporting public transfers in the member countries of the European Community in Hesse 1987. 'Oberhauser 1987.

1.2 Factors influencing non-market production

public infrastructure. Asam1 cites as examples of public domain where we find household-oriented infrastructure: defense, jurisprudence, public security and administration, education, research, spart, cultural activities, recreation, health care, social services, housing, transportation, energy and water supply and waste elimination. These public goods can, to varying degrees, be considered as being 'jointly consumable', i.e. consumption by one individual (household) does not make impossible their consumption by others. The impossibility of exclusion of potential consumers is a basic criteria of definition of Samuelson's 'pure public goods'. 2 In reality only a small part of public services can be considered to be 'pure public goods'. Loeffellwlz and Desce et Foulon3 cite as examples: defence, general administration, jurisprudence, public security and foreign affairs. They consider other public goods to be, in principle, imputable to individuals or households as consumers (by means of incidence analysis) and, hence, to be potential market goods.

1.2 Factors inßuencing non-market production by members of private households

According to Karmann4, current hypotheses about the causes of 'informal activity' can be classified into three groups: - those proposing that deficiencies in state regulatory mechanisms be responsable, i.e. tax burdens and wage deductions for social security are considered too high, - those attributing the responsability to malfunctionning of the market economy, especially with reference to comparative advantages of informal as compared to market transactions with respect to the availability, quality and price of tangibles and services, and - hypotheses stressing the role of personal satisfaction and prestige derived from 'informal' self-supply strategies. His analysis of macro-economic data Iead to the conclusion that the principal form of hausehold participation in the 'informal sector' lies in self-supply with goods and services, as opposed to active participation in the illicit labour market.

'Asam 1918, p. 48f. 2 Samuelson 1954; Buchanan 1968; Pommerebne 1987; Blümel, Pethig and Hagen 1986 and Hori 1975. 3

Loeffelholz, v. 1984; Desce et Foulon 1971; Foulon 1973 and Desce 1969.

• Karmann 1990, p. 187.

1 Household Behaviour in Theory

28

The term 'household production' (or 'harne production') means different things to different people. Reids classic definition of harne production 1 applied, in essence, to hausehold self-services (housework'). Recent investigations of hausehold production frequently expand the definition to include not only the performance of traditional hausehold chores, but also 'do-it-yourself production (of market su~titution gooclc;) for the needs of hausehold members.2 This selfsupply oriented delimitation of 'household production' does cover the major part of non-market production of hausehold members. However, besides illicit activity, our definition of 'informal economic behaviour' also explicitly included 'collective production', i.e. mutual assistence within social networks, spontaneaus help and institutionalised volunteer work. Theoretical work on the involvement of households in collective production is relatively meagre; empirical research on this subject has begun and will be discussed in a later chapter. Thus, our attention will centre here on the treatment in economic Iiterature of hausehold production in which producer and consumer are identical, that is on 'housework' and 'do-it-yourself Substitution of market wares and services. The main factors determining the amount and type of housework discussed in economic literature are: the size of the household, the number and age of children and the employment status of tbe wife (and mother).3 These relationships can, in principle, be depicted using the consumer/producer index proposed by A Tschajanow4 for non-wage farmwork in farming families. Economists are far from unanimity in their estimates of the importance of hausehold production as measured in relation to the Grass National Product (GNP) or the Grass Domestic Product (GDP). The major difficulties are due to problems in measuring economic behaviour, to different definitions of hausehold production and to differing evaluation concepts. Gronau and Hawrylyshyn, two of the most frequently quoted authorities on the subject, estimate that in highly developed economies the value added by the 'home sector' would exceed one third of the GNP, being even more important in less developed economies.5 Since the value of hausehold production is, ceteris paribus, directly related to

' "unpaid activities which are carried on, by and for the members, which activities might be replaced by market goods, or paid services if circumstances such as income, market conditions, and personal inclination permit the services being delegated to someone outside the household" Reid 1934, p. 11. 2

Garhammer 1988, p. 65.

3

Hesse 1985, p. 22 See also: Chadeau 1985 andAldershoffand Kaspar 1986, p. 308f.

• Tschajanow 1923. s Gronau 1980, p. 408 and Hawrylyshyn 1976.

1.2 Factors influencing non-marltet production

time-inputs, trends in time-use would be very informative about changes in the importance ofbousebold production through the years. Unfortunately, empirical results presented in international economic Iiterature contradict one another and do not offer a satisfactory basis for comparison. 1 At first glance, improvements in technology and in the equipment of households would suggest a decrease in time inputs into 'housework'. There are, however, a number of factors tending to COunterbalance any decrease in time required for bousework and for hausehold production in general:2 The level-ofdemand has risen; eg. clothes are washed more frequently, eating habits are more diversified, more time is spent per child on child care. An increased amount of time is spent cboosing goods as their variety and complexity increases (casts of infonnation3). More planning and coordination of the activities of hausehold members are necessary. Increased time is necessary for the maintenance of the growing stock of hausehold capital.

Although the preferable methods for quantitative analysis of and value imputation to hausehold production are sources of controversy, general agreement does exist about trends in tbe quality of hausehold production. Joerges specifies four main developments in hausehold production:4 - Hausehold production is becoming more capital-intensive; households are increasing stocks of high quality utility goods (productive capital) for do-ityourself Substitution of final consumption goods. - Hausehold production is becoming technically more complex due to the increased use of time and work saving equipment. - Hausehold production requires a higher degree of 'professional competency. Increasing infonnation costs are involved with the optimal selection and procurement of desired 'commodities' in view of the widening variety of consumer goods on the market. - Hausehold production creates jobs, especially in the service sector.5

1

Hesse 1985.

2 See eg.

Murphy 1978, and Do1714Ch 1982, p. 92

'See eg. Becker,(KO.) 1967, p. 18.

•Joerges 1983b, p. 2Slff andJoerges 1983a. See also Thkle-Wittig 1987. ' Statistics show that the production of utility goods for do-it-yourself activities is of increasing importance for the industrial sector too. See DoriiDCh 1982, p. 103ff; also Carlberg 1984, p. 62.

30

1 Housebold Bebaviour in Theory

Increased participation in do-it-yourself production is attributed to a nurober of factors: 1 eg. to - an increase in leisure time, - high cn>ts of labour, - nonsatisfaction of individual preferences by mass production, -easy availability ofinformation and know-how, - a wide selection of tools and prefabrication elements on the market, - prestige and self-satisfaction with accomplishments, and - a lack of genuine market alternatives. According to Joerges, 2 d~it-yourself activity requires resources (know-how and material prerequisites) from the 'formal' economy, thus increasing socioeconomic disparities for the unemployed and other disadvantaged groups. As we shall see in Olapter 3.2, this assumption is, in general, supported by the findings of empirical investigations of hausehold production.

1.3 Cboice tbeory and resource allocation

Micro-economic theories of the hausehold are largely based an choice theory with its basic premise of a consistent order of preferences of economic agents. 3 As stated above, Muth, Lancaster and Becker4 contended that market goods are mere inputs into hausehold production in which the desired consumption commodities/utilities are prepared for final consumption by the members of the household. Lancaster proposes that basic utilities are embodied by goods in different combinations and quantities; the hausehold chooses the specific good renderlog the desired maximumtotal utility. By contrast, Becker sees the source of utilities as being time-consuming activities in which goods only serve as inputs. For Becker the activities (a meal, a trip, ..) are the basic commodities sought; the choice or 'consumption technology' of the hausehold being subject to two constraints: money and time budget constraints.5 This perspective is of particular importance because it formally introduces the time budget of hausehold members as a resource; time allocation playing a major role ins hausehold decision-making.

1

Dornach 1982, p.

l~ff andAdatia 1980,

p. 25.

zJoerges 1983a, p. 73. 3

Becker, (KO.) 1967, p. 16.

• cited in Cbapter 1. ' Gronau 1986, p. 274!. See also: De Serpa 1971.

1.3 Choice theory and resouroe allocation

31

Besides time needed for regeneration (physiological needs, such as eating, sleeping, ..), Ieisure time,1 and productive time-uses (such as professional and other gainful activity, housework, mutual aid, volunteer action, ..), Becker and other economists2 imply that consumption itself makes significant demands on the time budgets of hausehold members. 'Consumption time' is further differentiated in 'pure consumption time' and 'transaction time', including time needed for consumer information. Presuming the hausehold to be rational, Hawrylyshyn advances the hypothesis that it will be devoting more than the minimum required time to an activity only because it in fact obtains 'direct utility' from that time in addition to 'indirect utility' obtained from any commodity produced.3 Incomplete information or costly transactions should not, in Beckers view,4 be confused with irrational or volatile behaviour. For example, economists have developed a theory of optimal or rational accumulation of costly information, which implies greater investments in information in major than in minor decisions. Simon's concept of 'bounded rationality'5 resulting from imperfect knowledge of economic agents also lends support to the notion of 'economic man'. Deductive reasoning on the basis of hausehold models, that is choice Simulation of decision-making in individual households, is impracticable, even if bounded rationality is taken into account. Pollalf> describes rewards and sanctions within households not open to other decision-making institutions due to the fact that economic relationship; are entwined with significant personal ones. Collective decision-making in households is, for example, characterised by limited opportunistic behaviour, loyalty, and generally accepted (not necessarily efficiency-oriented) norms of individual behaviour - in particular, tolerance of slack performance and no risk of expulsion, taking into account the wide variety of basic attitudes of individual hausehold members to work/specific activities. 7 Hence, knowledge about hausehold economic behaviour can only be sought on

1 which usually is treated as residual time after the deduction of regenerative time and produclive time - see eg. Wales and Woodland 1977. lt should be emphasised that Ieisure time c.an be used for both purely regenerative and produclive purposes. 1

See eg. Milde 1975 and Spaetling 1976.

) Hawrylyshyn 1977, p. 85. • Becker 1976, p. 6f. 'Sinwn 1982. • Pollok 1985, p. 586ff.

'Hallman 1990a, p. 26.

32

1 Hausehold Behaviour in Economic Theory

a general level by analysing 'revealed preferences' 1 of hausehold samples. In other words, by observing actual behaviour of representative samples of households knowledge can be induced about fundamental preferences or 'utility functions' that govem hausehold 'subsistence technology'.2 All economic transactions lead to changes in stock levels; for households, productive activity thus involves changes in the amount of disposable resources, such as available time or financial resources.3 The complementarity of different resources and the role of utility functions become apparent. For instance, the choice of the type of gainful activity to which hausehold members allocate their time or of the volume of their worktime may be directly related to their will or need to increase their dispa;able financial resources in the form of work income. However, they might also seek to increase their dispa;able financial resources by means of consumer credit, which involves risks (eg. loss of collateral, increasing interest rates,..) but not changes in time allocation.4 On the other band Claupein points out that monetary resources fulfill several functions: 5 They can be used - to support gainful activity of hausehold members, - for purely consumptive purposes, - as a form of social security, - as a fand for benevolent action (gifts, inheritances, ..), and - as a source of influence and prestige. As we have seen, time may be distributed between regenerative, leisure, and a variety of productive activities. Becker suggests that, in view of the decline in the average length of the work week, the allocation and efficiency of potentially productive non-working time may be more important to economic welfare than working time, although the attention paid by economists to the latter is dwarfed by that paid to worktime inputs. 6

1

See uses of the 'revealed preference' approach cited in Cecora 1985, p. 29.

The author's use of the term 'technology' to describe the household's specific choice of resource allocation is not new, see Chapter 0.3. 2

'Beclcer, (KO.) 1967, p. 2lf. • See eg. Leskinen 1990, p. 7.

' Claupein 1988andClaupein 1990. • Beclcer 1976, p. 89.

2 Private Households in Public Statistics Investigations of households with the help of statistics go back to the seventeenth and eighteenth centuries according to Kehrle and Reichhardt, 1 but modern economic research on households began with the work of Frederic Le Play in France and of Quetelet and Ducepetiaux in Belgium. Le Play is recognised as one of the pioneers of social research for bis inductive methods used in case studies offamilies of the French working class.2 Qu~telet attempted to establish geoeral uniform statistical standards for measuring consumption and other hausehold phenomena. Ducepetiaux implemented budget surveys in 200 households selected to reveal the effects on economic behaviour of their relative positions within the given social stratification. This work was followed up in Saxony and Prussia by Engels, whose principle about the inverse relationship between the proportion of hausehold expenditures for food and the Ievel of hausehold income achieved general recognition. Since then, budget surveys have found wide-spread use in public administrations in the United States, where they primarily served questions of economic policy, andin Europe, where they were chiefly an instrument for the development of social policies.

2.1 Depiction of households in generat administrative statistics: National and international accounts We have mentioned that the hausehold has been generally treated as a consumptive entity in national and international accounts. As we shall see later on, isolated attempts are made in individual countries to make calculated estimates of the amount of value-added by do-it-yourself activity with the help of data on purchased material and utility goods. It is, however, generally accepted that the major part of informally produced utility is the result of household-self services. 1

KeJJrle und Reichhardt 1982, p. 139ff.

l..e Play's research was not limited to French family households and was paricularly interesting due to its holistic appnach to household economic activity involving evaluation procedures, see eg. his investigation of farming and fishing households in Northem Spain: Le Play 1990, p. 90ff and 144ff. 1

3 C6cora

2 Private Households in Statistics

34

International task forces have tried to develope multidimensional methods for 'measuring housework' and to depict its importance in the form of uniform social indicators, but survey and evaluation problems have proven to be insurmountable.1 For example, even definitions of the most fundamental kind, such as of 'household' or of 'head of the household', vary considerably among the member countries of the European Community. As a consequence, camparisans of hausehold economic features within the EC are Iimited to generalities, such as the sector of economic activity in which members of the hausehold are employed and the number of economically active persans in the household.2 The United Nations' "Provisional Guidelines on Statistics of the Distribution of Income, Consumption and Accumulation of Households" 3 calculated 'total hausehold income as the sum of 'primary income' (from different types of gainful activity), capital income, permanent transfer income, and other incomes (without income from hausehold production). On the consumption side, the UN's System of National Accounts4 treats hausehold expenditures, slightly enlarged by a pro forma inclusion of self-produced tangibles but without any notion of self-services, as final hausehold consumption.5 The unsatisfactory representation of the economic Situation of private households in the System of National Accounts was criticised in the 'Provisional Guidelines' but no concrete corrective measures were proposed. A general revision of the international accounts is planned, however, for the early nineties.6 National accounts of member states of the European Community, eg. the SECN in France7, da not as yet go far beyond the UNs System of National Accounts. Attempts are being made, however, to depict Substitution and complementarity effects between hausehold non-market production and the output of the market sector by differentiating the so-called 'final consumption commod-

' Harsch 1986, p. 514. 2 Eurosial (Ed.): Economic and Social Features of Households in the Member States of the European Community. Luxembourg 1982.

3 United Nations (Ed.): 'Provisional Guidelines on Statistics of the Distribution of lncome, Consumption and Accumulation of Households', New York 1977.

• United Nations (Ed.): A System of National Accounts. Studies in Methods - Series F, No. 2, Rev. 3, New York 1986.

' Vanoli 1978, p 55f andHil/1979, p. 33f.

• Reich 1986. 7 See Institut National de Ia Statistique et des Etudes Economiques (Ed.): comJ:Ubilite nationale- methodes. Paris 1976 andReich 1986, p. 49.

Sys~me

elargi de

2.1 Depiction of households in statistics

35

ities' ofthe SECN according to three categories: 1 - 'substitute products' - saving households from producing similar commodities athome - 'complementary products' - serving the hausehold production of other goods and services, including utility and 'intermediate goods' and -'pure final consumption products'.

Money, tangibles and services received as remuneration of gainful activity, capital income, and transfer income are also the main elements of hausehold 'disposable income', as defined in the national accounts in the Federal Republic of Germany.2 Income in the form of real (natural) goods from the state and private enterprises, advantages durch subsidised goods and income from the sale of personal property are not recorded, nor is income that is counterbalanced within tbe hausehold sector (eg. monetary gifts, inheritances, income from transactions between households). In particular, no account is made of hausehold self-services or of do-it-yourself activity. 3 Propasals have been made since the 1970's to eliminate the restriction of the national accounts in the Federal Republic to 'market activities' and to treat the hausehold not only as a consumer-unit but as a producer as weil, thus far without success. Hence, private households have been accredited with only two percent of the GDP (Sozialprodukt').4 The outlook for identifying and evaluating the output of 'informal' produclive activity of households, especially of self-services, as a contribution to total national income within the national accounts is not very promising. For this reason, attempts have occasionally been undertaken to determine the volume of time inputs into such activities. As opposed to certain other industrialised countries, comprehensive time-budget studies have not been conducted to date in the Federal Republic of Germany, with the exception of a survey in 1000 households as a supplement to the 1983-lncome and Expenditure Survey in the state of Baden-Württemberg. Small-scale, specialised, activity-oriented time-use surveys have been conducted but a review of recent time-budget studies has shown that diary surveys produce more accurate results than estimations of time spent per day an specified activities.5 The most frequently cited time-budget diary

'Chadeau and Roy 1986.

zSee, eg. Schüler und Mitarbeiter 1990, p. 183f. >Euler 1985,

p. 57.

• Schmucker 1979. 'Ehling und Schäfer 1988, pp. 455, 458 and 460.

2 Private Households in Statistics

36

survey is the UNESCO time-budget study directed by A. Szalai in the 1960's with data on 30 000 individual survey days of participants in twelve countries. 1 The results were of a general comparative nature and could not be considered as a basis for evaluating tbe output of hausehold praduction.

2.2 Statistkai instruments in the Federal Republic of Germany The most frequently surveyed economic feature of private households in administrative statistics is their level-of-income and its individual components.2 In some statistics, such as in the micro-census and the housing samples, selfclassification according to the level-of-income is the metbad used. This metbad is, needless to say, not reliable, particularly when precise data for a given year are needed.3 Other statistics aim at gaining information about certain specified types of income, such as permanent surveys on work income, surveys on employee salaries and wage tax statistics. A primary objective of income tax statistics and of statistics from periadic income and expenditure surveys is to obtain an over-all picture of total hausehold income. These statistics have their shortcomings too. For example, income tax: statistics ioclude only part of the population and are not bousehold-oriented, but pertain to the income of natural persons or 'splitted' couples. The income and expenditure surveys, which are conducted approximately every five years on a wide scale, would appear to yield the best reference data. Uke the national accounts, the income and expenditure surveys are intended to gain information on every kind of income received by private persons, although there remain certain incompatibilities between the structures of this survey and the national accounts.4 A major flaw of the income and expenditure surveys would appear to be deficits in the survey of nonconsumptive gains in self-employed households, i.e. profits from family enterprises not witbdrawn for private consumption, but increasing business assets. In principle, a further base of reference is affered by the permanent hausehold accounting surveys, which are, in their concept, compatible with the income and expenditure surveys, but which are restricted to three defined hausehold types

I

Szalai 1972.

1

Fora detailed ckscripion of administrative swveys on iocome see: Euler 1985.

Experience with self-dassification in the income and expenditure surveys has revealed an inclination of participants to underestimate their level-of-income. See: Euler 1985, p. 411. 3

• For example, differences in defmition of income and indusion (the income and expenditure surveys exclude households of non-citizens, collective households/institutions and households with very high levels-of-income). See: Euler 1985.

22 Statistical instruments in Gennany

37

with a maximum of 1000 participants. The Federal Bureau of Statistics stresses the fact that this statistic was not conceived as a reference statistic, but rather as a basis of longitudinal analysis, notably of trends in income and the cost of living.1 The income and expenditure survey sbowed in 1983 for four-person-households (all types of gainful activity and all income categories, save high incomes) an average total montbly income of DM 6 037., of which DM 115. was capital income.2 There are marked differences in the average Ievel of 'disposable income' of employees and farmers. 3 On the other band, farming households received more than twice the amount of public allocations than other groups of households. Both farming and non-farming self-employed households drew a significantly greater proportion of tbeir income from capital assets than employee households.4 lbe higher their average monthly income, the more likely households were owners of their own residences.5 Farming households are the exception. Although they are not, on the average, high income households, 93% of them were owners of owner-occupied residences, compared to only approximately 72% of non-farming self-employed households with higher average incomes. About 49% of employee households were home-owners. 12% of nonfarming harne owners did not live in their own homes but were, themselves, renters.6 Farming households bad the lowest average Ievel of mortgage7 and consumer credits. According to the survey, the financial assets of all four-person households amounted to an average of DM 2h 453 and their debts to DM 2 559.9 Analysis of the use of income has revealed a smaller proportion of income for saving in self-employed households (farmers, households with liberal professions or family businesses). On the average, capital formation reaches a peak in the middle

1 For descriptions of permanent hausehold aa:ounting surveys see: Kunz und Eu/er 1972; Kelvle und ReichJuzrdl1882 and Angele 1988.

z Euler 1988, table 1, p. 566. >See data for 1982 in Statistisches Bundesamt 1985, p. 99. • See data for 1978 in Statistisches Bundesamt 1985, p. 100 and Eu/er 1988, tabel 2, p. 567.

'Eu/er 1984, table 1, p. 460 and 1988, p. 566. • Braun 1983, p. 968ff. 7

See Braun 1983, p. 968ff.

• See Eu/er 1985b, p. 410.

• Eu/er 1985b, table 2, p. 410.

38

2 Private Housebol and Schiifer1 , who, nevertheless, point to a recent estimate by Hilzenbechef.8 which assesses the value of all informal activities of family (household) members to be as high as 68% of the West German social product. In general, the participation of private households in 'informal activity' is seen mainly as self-supply with goods and services and not as a supplier of'illicit Iabour'. 9 After having reviewed a total of 120 economic assessments of non-market 'household production' carried out in industrialised and developing countries,

' See also Murphy 1978, p. 244.

z Hawrylyshyn 1976. 3 Goldschmidt-Clermont 1982, p. 4 and 1990, p. 281. According to Goldschmidt-Ciermont (1990) research data indicates that in industrialised countries unrecorded household production may absorb about as much labour time as all oombined activities in the recorded sector of the economy.

• Badelt 1988, p. 252 s Harsch 1986, p. 515.

• Lütze/1983. 'Schäfer 1988, p. 309. • Hitzenbecher 1986. • See Karmann 1990, p. 203.

3 Informal Activity in Empirical Research

44

Goldschmidt-Clermont1 concluded that, inspite of the above-outlined difficulties and varying results, it is indeed feasible to measure (evaluate) non-market hausehold production in economic terms.

3.2 Behavioural research on household 'informal economic activity' The estimates cited in the preceeding chapter have little to da with the question at band, wbich pertains to the importance of 'informal' activity for the attainment of the level-of-living of private bouseholds. The closest we can come to finding estimates of this kind are tbose made for the value of hausehold or harne production encompassing, for the m~t part, self-services ('housework') of tbe members of the housebold. Gronau2 states that the value of home production of housewives alone in U.S. families in 1973 exceeded 60% of the families' money income before taxes and 70% of it after taxes. In families with preschool children it even reached 86% of total family money income. Hawrylyshyn 3 concluded from bis review of empirical estimates that family members other than the housewife may contribute as much as one third of the total value of hausehold production. The effect of the wife's participation in the labour market was found to be paramount; 4 hausewerk tending to increase with the number of children and to decrease with their age.5 Cecora's investigation of the effects of locational factors an hausehold economic behaviour in four-person-employee-households with an intermediate level-of-income in rural areas of the Federal Republic of Germany in 19836 showed that the resultant value of 'informal activity' (in essence: 'housework', hausehold self-production of market Substitutes and value transfers from other households) accounted an the average for 62% of their 'real consumption' (excluding collective goods, environmental goods and self-services in private transportation).

1

Goldschmidt-Ckrmont 1990, p. 288.

1 Gront1U

1980.

• Hawrylyshyn 1976.

• See also Chadeau 1985, p. 238; Schram andHafstrom 1984 andKrüsselberg 1987, p. 113ff. 'See also Walkerand Gauger 1973, p. 9 and Reid 1934, p. 102f. Reid cited a study of time use of Oregon homemakers by Wilson whose results showed that when the average time given by homemakers to a child under 1 year is considered 100.0, that of a child from 1 to 5 years of age is 35.3, that of a child from 6 to 14 years of age is 8.7, and that of a child 15 to 18 years of age is 6.8. •Ckora 1985.

45

3.2 Behavioural research on 'informal activity'

For reasons stated in Cl!apter 3, the most frequent form of investigation of hausehold economic behaviour serving as a basis of evaluation of hausehold production output is tbe Observation of time allocation by hausehold members. Tbe following table, taken from the results of a supplementary time-budget survey in a subsample of the income and expenditure survey in Baden-Württemberg in 1983, which served as a pilot study for proposed 'satellite surveys' on hausehold production in the Federal Republic of Germany, sbows the relationship between the amount of labour market participation of the wife and the amount ofhousework performed by busband and wife:

Table 1: Individual Time-Inputs or Household Member (in mlnutes per day) wife

buaband

Employee couples

work- tiae incl. ca..utat.

wi th 2 children

hausewerk

total.

werktime incl.

COIIIIUtat.

housework

total

only the busband works

376

130

507

13

489

502

both spouses werk

371

122

492

210

344

554

-

- pnvater Hausbah>:. Soorce: Tab.l, p. IIS •• K#skr, R.: ArbaiiZC•tbadscts •••gcwablter Bodco-WirllcmbaJ ia Won ud Zabl S/1984. 114-119.

According to these results, housework is chiefly the responsability of the woman; when she has a job her time inputs into housework decrease markedly witbout any compensatory time inputs from her husband. In households where only tbe busband works, the woman's bousework-day exceeds eight hours. Goldschmidt-Clermont finds it not surprising that time-inputs into housework are of tbe same order of magnitude as in the overall market sector because, given labour market constraints and hausehold work requirements, housewives not in the labour force tend to devote to hausehold work what is socially accepted as a work day. 1 The different relative importances of the time inputs of husbands and of their spouses witb and witbout employment into 'housework' indicated by Table 1 were further corroborated, for example, -in results of the French national statistics for 1974 cited by Fouquet2, - in other French studies reviewed by Kende,3 including bis own,

1

Goldschmidt-Clermont 1982, p. 10.

• Fouquet 1980, p. 11. 3

Kende 1978, table 2, p. 239 and table 3, p. 241.

3 Informal Activity in Empirical Research

46

- in a study by Hili for the U.S.A in the mid 1970's cited by Gronau., 1 -in a comparison of survey results for four-person bouseholds in the U.S.A. and Finland in 1979 by Kirjavainen,2 - in the results from 1400 diaries of two-parent, two-child families in the U.S.A. in 1975-76,3 and - in survey results for the U.S.A., the Federal Republic of Germany, the German Democratic Republic, and the Soviet Union from the SzalaiUNESCO study cited in v. Rosenbladt.4 Furthermore, tbese gender differences as weil as the above-described influences of the number of cbildren and of their age on the amount of time spent on 'housework' were confirmed - in France by Chadeau. and Fouquet5 on the basis of interviews and one-day time-budgets of 7000 persons, -andin the U.S.A. by Walkerand Gau.ger6 in a survey in 1378 two-parent, two-child housebolds. Unfortunately, empirical researcb bas not succeeded in clarifying tbe dispute as to whether average time allocation to 'housework' bas declined or remained more or less constant, as contradictory results cited by Robinson7 and by VanefReid 1934, p. 94.

•Merzan4Wolff1989, p.11. SeeaisoMerzundWolff1986, p. 4. 'Pahl an4 Walloce 1985, p. 350. • Ollmann, Nu:ssen und FJJing 1985, p. 198!. 7

SeeDornach 1982, p. 169 and tables 5, 6 and 7, p. 192ff.

1

Glatzer an4 Berger 1985, tab. 2, p. 335. See alsoGlatzerund Zapf1983, p. 379ff.

3.3 UIWISwered questions and hypotheses

49

social networlcs to the performance of domestic chores is negligeable - a Supposition to be doubted, at least in self-employed households, such as farming housebolds. Various studies1 have identified relatives, friends, neighbors and collegues, in tbis order, as the principal participants in mutual assistence within social networks.

Deimer et al.2 cite a number of studies in the Federal Republic of Germany which found a proportion of potential participants in voluntary social services between 29% and 35% of the sample population; the proportion of activists in the samples was between 3% and 11%. These results would appear to underestimate the over-all importance of hausehold voluntary action, perhaps due to definitions of 'potential participation' or the scope of registered voluntary activities. A survey in tbe U.S.A3 showed, for example, a rate of participation in volunteer werk of 57%. Finally, another form of access of households to market substitutes is the reception of tangible gifts. Of partiewar interest and importance in this context is the question of intergenerational transfers, which, of course, also includes monetary transfers and services (within social networks). Clausen's review of Canadian, American and German statistics4 showed that elder persons/households give more resources tban they receive; the inverse situation being the case in households of young adults.

3.3 Unanswered questions and hypotheses Attempts to assess the importance of a phenomenon are largely determined by the base of reference. The usual measuring rod of 'informal' activity has been provided by the national accounts in the form of various indicators of the total national product. The entire spectrum of 'informal economic activity' has seldom been investigated an a micro-economic level - largely due, an one band, to difficulties in observing, registering and calibrating very heterogeneaus 'informal' economic transactions and, an the other, to the lack of a relatively uncomplic-

1 For example, !essen und Siebe/1989 and Merz und Wolffl986. See also Garhmnmer 1988 and Deimer et al. 1983, p. 21.

1

Deimer et altera 1983, p. 21.

>Wolozin 1985, p. 35.

• Clausenl988. 4 Ctcora

50

3 Informal Activity in Empirical Research

ated and empirically operationable holistic model of hausehold economic behaviour. We have, in essence, defined 'informal' as meaning 'unobserved' or, at least, 'unsufficiently observed'. In alllik:elihood, economists arenot above the all too human trait of underestimating that what they da not see. The assumption in administrative statistics, that the consumption value of certain self-supply mechanisms, such as garden produce, allowances-in-kind, .. are marginal, needs verification. The results of questionnaire surveys an the importance of and the valueadded by 'housework', 'do-it-yourself activity, mutual assistence within social networks, official voluntary work, transfers in money and tangibles between households, etc. vary considerably and are mostly impossible to compare - due, among other things, to significant differences in location (country) and date of the survey, traits of the sample populations, length of the period of reference, and delimitation of the subject matter. Attempts at evaluating the productive output an the basis of questionnaire surveys may be termed 'heroic' and da not represent the best possible performance of empirical research. For these reasons, we have undertaken a comprehensive survey in a small, but relatively homogeneaus sample of households in order to test a number of hypotheses specified in the following.

Parting from the premise that market prices should be the base of reference for the evaluation of economic performance/output, we propose the following hypotheses: 1: 'Informal' activities and, in particular, non-market production of goods, contribute significantly to the level-of-living of private households, as measured by their 'real consumption'. 2: The by far largest 'informal' contribution to real consumption can be attributed to 'housework' performed by members of the hausehold themselves. 3: The consumption value of tangible market replacement goods provided by hausehold members (do-it-yourself, including garden produce) is considerably less important than the value of 'housework' but is, nonetheless, significant.

3.3 Uoanswered questions and hypotheses

51

4: Market replacement goods from extemal sources (neighbors, friends, relatives) represent only a small fraction of the value of do-it-yourself production.1 5: In accordance with the estimation of administrative statisticians, the consumption value of allowances-in-kind and of private use of business stocks is almost negligeable.

Furthermore, we hypothesise that a comparison of the subsistence technologies of occupational groups will show an the average of the survey subsamples: 6: a relatively greater contribution by transfer income from the state to subsistence in farming households than in non-farming households. 7: a relatively smaller contribution by capital income to subsistence in farming households than in non-farming households. 8: a relatively smaller contribution by monetary income from professional occupations to subsistence in farming households than in non-farming households. 9: a relatively larger contribution by 'informal activity' to subsistence in farming and other self-employed households than in employee households. 10: a lesser importance of credit income for subsistence in farming than in nonfarming households. 11: a considerably greater relative importance of goods-in-kind as a resource income to subsistence in self-employed households, in particular in farming households as compared to employee households.

12: much greater average time-inputs into professional occupations in self-employed households than in employee households. 13: a greater average time-input by employee households into 'housework' than by self-employed households. 1 This hypothesis was supported by the findings of questionnaire-surveys, see Glatzer und Zapf 1983, p. 377.

52

3 Informal Activity in Empirical Research

14: a higher imputable average rent-value in farming than in non-farming households. 15: a much greater average value of services from non-members of the hausehold in farming than in non-farming households.

4 Design and lmplementation of a Survey on Household Economic Behaviour and its 'Informal' Aspects:

4.1 Theoretical concept The underlying concept of this study is rooted in the theoretical framework of tbe "New Horne Economist" school of thought. 1 The first of two mairt poirtts from New Horne Economics stressed here is the substitutive character of consumption goods, which do not irt themselves provide utility to the consumer. According to Lancaster2, it is rather the 'consumption commodities' embodied by those goods which provide utility and these commodities can often be found in different types of consumption goods. For example, considering comfortably warm living quarters irt winter to be a 'commodity', the utility can be derived from different types of consumption: insta11ation of better insulation or of solar heatirtg facilities, combustion of either coal, gas, wood or oil. There are a number of factors influencing the household's specific utility function which fina1ly determine the preferred or chosen 'technology'. Among these factors are the price/cost of the irtputs, includirtg irtformation and transaction costs3 and the quality of the outputs. The second point to be made is the im portance of time as a resource input by households irtto their attairtment of a given Ievel-of-living which was emphasised by G. Becker.4 This insight bad, however, also been previously implemented in empirical irtvestigations by A. Tschajanow. 5 Time can be regarded as a basic resource which, unlike other resources, is equally distributed to all members of society. Inequalities (in human capital) only arise from energy levels people irtvest and their individual knowledge-based productivity.6 As we bad noted in the preceeding discussion of hausehold behaviour in economic theory, ifa hausehold is presumed rational, it will devote more than 1

Represented by Becker, Lancaster and Mulh, see Chapter 1.3.

1

Lancaster 1966.

3

See eg. Becker 1967, p. 18; Milde 1975, p. 483f; Spaetling 1976, p. 32 and Stolper 1982.

• Becker 1976, p. 91ff.

'See TschajOIWw 1923. • Robinson 1978, p. 104.

54

4 Design and Implementation of a Swvey

the minimum time required for an activity or prefer this activity to another only when it gives some personal satisfaction (direct utility' of time-use) in addition to the 'indirect utility' of the produced commodity. 1 On tbe other band, if aparticular activity occurs frequently to the point of saturation of the personal needs and wants of hausehold members, its place on the preference (and 'direct utility') scale will change.2 Combining monetary resources and resources-in-kind, i.e. stocks of consumption and utility goods, a hausehold employs its human capital (time, knowledge, experience and skills of members of the household) to obtain full consumption utility. Full consumption utility will be expressed in tbe following in terms of the above-defined 'real consumption' which, tagether with resource allocations, such as capital formation and insurance (which are equivalent to postponed consumption or consumption guarantees), accounts for the major part of total resource allocation. We shall take a system dynamics approach in investigating the economic behaviour of private households. Models in system analysis differentiale between 'Ievel' and 'flow' (or 'rate') variables. Level variables reflect 'inventories' of quantitative phenomena at a designated point in time t; whereas flow variables show changes between two Ievel variables within a given period, eg. in the period t-1 to t. Although the state of Ievel variables have been taken into account, especially in the selection criteria for survey households as well as in some of the data obtained by interview, our interest will focus first and foremost on the examination of flow variables during a fixed survey period since these are the most revealing indicators of the household's dynamic 'subsistence technology' (economic behaviour) during tbe period. Figure 3 depicts the process of hausehold subsistence comprising resource income and allocation by members of the household. Level variables are depicted as 'boxes', whereas flow variables take the form of 'rivers and tributaries'. This flow chart shows resources available to hausehold members (as Ievel variables) at the centre of the diagram. In accordance with concepts and definitions specified above, we distinguish between cash and monetary values (nominal goods); tangibles, incl. real estate, services, rights or entitlements (real goods) and time potential (lwman capital).

1

See Hawrylyshyn 1977, p. 85, see Chapter 1.3.

z See Becker (K.O.) 1967, p. 78.

4.1 Theoretical concept

55

4 Design and Implementation of a Survey

56

Nominal and real goods may come from a number of external sources which are depicted as Ievel variables on the left band side of the diagram. They may be in the form of financial transfers/allocations or of tangibles or services from the state and from other collectivities, be they profit or non-profit organisations. Private assets yield capital income or can be Iiquidated to provide financial resources. As Babeau1 points out, tangible (real) assets are, in principle, goods with an economic life (utility) which surpasses the period of observation (survey). However, for practical reasons andin accordance with the practice in administrative statistics,2 we treat the purchase or acquisition of a good and its consumption as simultaneaus events, thus avoiding the calculation of the depreciation of durable utility goods and of costs of storage and spoilage of consumption goods. Gainful (self-) employment ofthe 'economically active population' provides wage income/profits and often in-kind-remuneration. The same is true for 'side-jobs' (informal activity). Monetary resources can become available for consumption or investment by credit financing. Other private persons/households frequently provide money, tangible gifts, and services. Finally, a number of tangibles with monetary values can be derived directly from the natural environment. The degree of access to these various forms of income corresponds largely to the time hausehold members allocate to 'formal' and 'informal' productive time-uses. Human capital can, however, also be used for self-provision of the hausehold with 'market-replacement goods' and with 'hausehold services'. Having distinguished in our model between different forms of hausehold resources and their various origins, we now turn to their use or allocation. Once again we differentiate between nominal and real goods; nominal goods (cash and financial assets) being merely stockable units of consumption values which must be transformed by market purchases into consumable 'real goods'. These (real) market wares and services are supplemented by other consumable real goods that the hausehold produces itself or receives from other non-market sources, i.e. market goods are joined by market replacement goods resulting to a large extent from do-it-yourself-activity and from hausehold self-services Chousework') and by tangibles, services and entitlements obtained from external sources. As pointed out in Chapter 1.1, productivity and opportunity costs of time change with developments in technology andin the economy, inducing transfers of economic functions/activity between the private household, private enterprise

'Babeau 1978, p. 8f. 2

See, eg. Euler 1966, p. 418 and Vanoli 1978.

4.2 Survey sample, design and implementation

57

and the state. 'Ibis has an effect on the amount of non-market production in private households (market-replacement goods and 'housework'). 1 Our review of behavioural research2 has shown that socio-economic status and changes in status also have an influence on the amount of non-market hausehold production. Low-income households tend to engage to a lesser degree in non-market production than middle-income households, while higher-income households tend to rely more on market goods. Households on the lower end of the socioeconomic scale do not posess as much as others the prerequisites for effective non-market production, i.e. work space, technical equipment, material, professional and social contacts, skills and knowledge. 3 Thus, different socio-economic groups may characteristically utilise differing 'subsistence technologies'. The resultant total flow of real goods is the effective resource input into the 'real consumption' of the household, which, as we have already noted, differs substantially from the so-called 'private consumption' as defined in administrative statistics and which proves to be a good indicator of the household's level-of-living. This systems dynamics view of hausehold economic behaviour is geared to assure the holistic perspective of hausehold resource income and use propagated by the New Horne Economists and, more recently, by other scientists engaged in empirical economic research, such as Juster and Stafford.4 A particularity of this study is that the holistic view of hausehold economic behaviour was already a basic and decisive element in the survey concept prior to the field work.

4.2 Selection of the survey sample, survey design und implementation 'Ibis chapter describes the attempt to operationalise the holistic concept of hausehold economic behaviour presented above. Constraints imposed by limited resources are, in part, counterbalanced by a careful selection of survey participants and detailed diaries for a lang survey period. ' Factors and trends in tbe amount of non-market household production are discussed, among otbers, in Skolka 1976, p. 300f; Cecora 1985, p. 31ff; Adatia 1980, p. 25; See! 1984, p. 6; Goldschmidt-Clennont 1982, p. 7ff; Vanek 1974; Harsch 1986, p. 520; Robinson 1980, p. 54ff; Carlberg 1984; Scheukat 1984a, p. 156f; Joerges 1983b, p. 250ff and 1983a; Claupein 1988, p. 271; Gerstenberger 1987, p. 42; Cassel und Cichy 1986; Thiele-Wittig 1987, p. 120; Hesse 1985; Cazes 1972; Gershuny 1983; Dornach 1982, p. 103ff; Wagner 1984 and Lakemann 1989. z See Chapter 3.2. 3

See Schulz-Borck und Cecora 1985 and Jessen, Siebelet al. 1989, p. 412.

4

Juster anJ Stafford 1985.

4 Design and Implementation of a Survey

58

4.2.1 Selection ofthe survey sample

The chosen survey metbad is situated between large-scale sample surveys which aim at gathering (fragmentary) data about a 'representative' segment of the population and individual in-depth case studies. We repeat, the basic goal was to gain a 'holistic' view of resource allocation by members of identical private households over an extended survey perlad (one year). Such an enterprise involves intensive book-keeping by the participants and requires continuous personal assistance to the survey households by the members of the scientific staff. Due to limitations in research manpower and financial resources only a limited number of participants was able tobe included in the sample. In order to avoid a mere summation of heterogeneaus case studies and to obtain results permitting careful generalisations in their interpretation, the three-man-researchteam opted for the choice of a particular well-defined type of hausehold which, by its composition and situation in the family cycle, would be 'representative' of many other types of households with respect to the functions it fulfills, eg. child-raising and gainful (self) employment. For purposes of comparison with other data bases, it bad also to be relatively well-depicted in pertinent areas of available administrative statistics. The elected survey sample consisted of 100 four-person-households (two parents, two children) engaged in (self) employment yielding an 'intermediate' Ievel of income. 1 The surveyed employee households differed from the so-called 'type-2' households of administrative statistics in Germany only insofar as households with spouses having work incomes were also included in the sample. Self-classification according to the level of income, which is practiced in administrative surveys, eg. in the microcensus2 generally does Iead, however, to underestimation of the level-of-income.3 All sample households lived in rural

1 According to the delimitation of this income category by the Federal Bureau of Statistics for its Housebold Accounting Surveys, seeAngele 1983, p. 447 and 1988, p. 575, this would amount to a wage income of the main 'breadwinner' approximately between DM 2500, and DM 4000, per month.

z See Eu/er 1985a, p. 56.

See Eu/er 1985b, p. 411. At the conclusion of the survey the research team made its own assessment of the level-of-living of the participating households judging solely on the basis of observation of such indicators as housing conditions, possession and quality of utility and luxury goods, vacation habits, etc. 58% of the households appeared to correspond quite closely to the expectations for 'households with an intermediate level-of-income'; 13% of the survey households appeared to have a level-of-living inferior to expectations; 18% of tbe participating households seemed to bave a level-of-living exceeding the possibilities offered by an intermediate level-fincome and 11% of tbe households had a Ievel of living cbaracterized by affluence. Differentiating between socio-professional categories, we noted that affluence was found only in entrepreneur and in full-time farming households. Full-time farming households were, however, Iogether with employee households, also among the participants at the lower end of the level-f-living scale. 3

4.2 Survey sample, design and implementation

59

communities in areas marked by a high degree of economic stagnation (although as gainfully active households witb an intermediate Ievel of income, they, tbemselves, were not in economic difficulties) and bad one cbief 'breadwinner', in all cases the busband and father. Due to the particular interests of the sponsor of this project, 1 farming bouseholds are considerably overrepresented in the survey sample which, nonetheless, by means of data disaggregation does provide a solid analytical basis for four subsample-types: full-time farming households, part-time farming households, self-employed households with small family businesses (henceforth called 'entrepreneur households') and employee households. This typology will be instrumental in ascertaining whether 'subsistence technology' and, in particular, whether the roJe of 'informal activity' varies between these socio-professional categories.

4.2.2 Survey design and implementation

The field work phase of the project Iasted approximately one and a half years. This lang survey period bad several advantages: 2 Seasonal fluctuations in the purchase of market wares and services were neutralised; more large-value transactions (income and expenditures), which tend to vary to a high degree, were included, and the year-long participation of the households helped avoid errors or, at least, permitted recognition and correction by the interviewer and scientific team. After final selection of the participants, they were instructed as to the concept, objectives and methods of the research project. The participants were alerted, in particular, to the importance of recognition and registration of all facets of hausehold economic activity, including (informal) non-market productive and consumptive activity. An initial interview was conducted. This interview, which was the first of four stylised oral interviews by the research staff, concentrated an socio-demographic data of the members of the household, an descriptive data about the household's residential location and an 'subjective' data about the household's perceived economic and geographic/locational Situation.

1 The Federal Ministry of Agriculture, Bonn in cooperation with the Federal Agricultural Research Centre, Braunschweig. 2

Euler 1966.

4 Design and lm(iementation of a Survey

60

Book-keeping on resource income and allocation commenced on July 1, 1986. lt comprised tbe simultaneaus use of two diary booklets: - One booklet was provided for the registration of the time allocation of all members of the household and of time inputs to the benefit of the survey hausehold by non-members of tbe housebold. Tbe registration of time-use did not pertain to specific activities tbemselves but involved the day by day repartition of tbese activities among generat categories of time allocation.1 As stated above, the diary metbad is without a doubt more exact than aggregating tbe duration of individual specified activities.2 - Tbe other booklet was used to register total income, production and use of nominaland real goods (eg. wages, transfers, loans, gifts, do-it-yourselfproduction, expenditures, consumption, otber resource allocations). To avoid overburdening the housebolds,3 the two diaries were conceived for both intensive (exhaustive) and Iess tedious (selective) inscription procedures; these procedures altemated between the diaries for time allocation and for income and use of real and nominal goods throughout the survey year in a manner taking into account seasonal influences an the phenomena in question, see Figure 4. Tbe notation of time-use was made somewhat easier in the simplified diaries by slightly Iess differentiated time categories. Tbe simplified notation of the income and use of real and nominal goods merely omitted the registration of individual cash expenditures not amounting to DM 50,; this entails a considerable diminuation of inscriptions at the lass of data that, in general, can easily be extrapolated.4 Tbe ratio of 'intensive' to simplified book-keeping monthswas: - for time allocation: 6/6 - for the income and use of real and nominal goods: 4/8; however, most participating housebolds volunteered at least 6/6, many 12/0.

1 Direcl tests of lhe diary melhod (comparisons of simultaneaus observalion and diaries) have shown thal the aggregate diary results correspond quite closely with reality, see eg. Robinson 1978, p. 106f and Harsch 1986, p. 515.

1

See Schäfer and Ehling 1988, p. 458f and Juster and Stafford, 1985, p. 5f.

Administrative statisticians regard the survey of the produclive outpul of households lo be in itself a too heavy burden for survey participants and resort lo lhe measuremenl of time-inputs, see Schäfer 1988, p. 312ff. The simultaneaus measuremenl of bolh is an unique feature of this survey and would indeed be imJ:racticable on a mass stalistical basis. 3

• This assumption is based on the premisses thal consumption needs arise more or less periodically - see, eg. Becker, (KO.) 1967, p. 77f - and thal the vasl majority of small expendilures are for so-called ' convenience goods' - see Cecora 1985, p. 38.

61

4.2 Survey sample, design and implementation

Flgure 4: Survey schedule period survey

pre-

surve.y

period

7

8

I

I

1986

1987

mont.hs 9 10

mont.hs

11

12

1

I

I

2

3

post-

4

s

I

I

6

survey

period

diary: time allocation - intensive inscription - selective inacription

s

s

s

I

I

I

s

s

s

diary: income/allocation of •oney and inkind goods - intensive inscription

s

- selective inscription interview&

Q

s

I

s

s

Q

s

s Q

s

s Q

Two interviews and control visits to the participants were carried out by the research staff during the year-long book-keeping phase of the survey. Focal points of these standardised interviews were: inventories of utility goods and facilities; size, equipment and comfort of dwellings; the action space of the members of the household; shopping habits; self-help and mutual help among neighbors, friends and relatives; voluntary work; do-it-yourself activity; the use of tangible natural resources; vacation habits and consumption needs for hausehold services. After completion of book-keeping at the end of June 1987 and after having allowed time for concluding the review of diaries and for preparing detailed individual check sheets for each hausehold based on plausibility checks and on a systematic control of fixed costs and income,.., a final interview was conducted which invited the household's own evaluation of its survey inscriptions pertaining to their representativeness for the situation of the hausehold in generat during the survey period.

Three areas were excluded from the survey analysis: - the Ievel and balance ofprivate assets/debts, (Since capital formation and de-

pletion were excluded from the survey, the households were also requested to give rough estimates about the direction and dimension of changes in its capital assets.)

4 Design and Implementation of a Survey

62

- tax paid by members of the household, and

- the contribution of collective public services to real consumption. The level and cbanges of private assets are highly sensitive data which are often characterised by a lack of transparency even among members of family households. Besides secrecy about wealth and debts as a prohibitive factor, it is almost invariably beyond the survey participants ability to exactly state gains and lasses within a clearly defined period due, for example, to capital accumulation in certificates of deposit, to cbanges in the current value of stocks, real estate and life insurance policies, to the rise, stability or fall of interest on credit in relation to the inflation rate, and to incertainty about the effective value of entitlements, such as to social security or to private pensions, .. In addition, there are problems in defining 'private assets'; thus, even in administrative statistics many phenomena having definite traits of private financial assets are not labeled as such; eg. private life insurance policies, entitlements to private pensions, payments in case of death, marriage, etc., money in cbecking accounts, cash on hand, .. 1 Administrative statistics do not succeed in accounting for more than half of the private wealth indicated by figures of the German Federal Reserve Bank.2 Finally, an attempt to discem private from business assets in self-employed households would be purely arbitrary. Fortunately, private assets and debts are only relevant to questions about hausehold 'subsistence technology' (i.e. to our indicators of hausehold economic behaviour) in as far as they generate disposable resource income or absorb resource outputs. Such resource flows were included in the survey. Due to the high sensitivity of tax questions and also to a lack of sufficient methods for identifying and deducting the part of business taxes paid by households with farms or non-farm enterprises that would really make possible a comparison with the private income tax of employees, taxes were not included in the analysis. As for 'collective goods' provided by the state and by non-profit organisations, their availability and quality are recognised as having a significant influence on hausehold economic behaviour.3 However, a survey of the use and

' See Euler 1988, p. 565. 2

See Euler 1985b, p. 409ft.

See Asam 1978; Rondorf 1985 and Zeppemick 1988, p. 254. For example, the choice of residential location is often determined by the access and quality of public infrastructure, such as schools, ttansportation or sport facilities, etc., see McDougal/1974. A household Iiving in cheap but satisfactory public housing would also be less inclined to purchase an appartment of its own. 3

4.2 Swvey sample, design and implementation

63

value of public services would have entailed an extensive incidence analysis (frequency, length and intensity of use 1) with a subsequent evaluation of real transfers based an purely fictive market values having no definite relationship to production costs. No metbad for assessment of the 'market value' of public services has yet been developed,2 although a great deal of theoretical work has been published an this subject, see Chapter 4.3.4. The high quality of the data an which the following survey analysis is based was assured by the constant contact between the experienced research team and the participants, which included a detailed introduction of the participants, written instructions, repeated personal control visits, frequent telephone calls, extensive and continuous systematic control and processing of the data (incl. codification) by the individual supervisors of the survey households. Even when great pains are taken to maintain uniformity in data registration problems da arise. Space was provided in the booklets for brief notation of the facts of cases in doubt so that unnecessary loss of time by the survey participants could be avoided and a subsequent, uniform inscription of the matter in question by the research staff would be assured.

4.3 Classification and evaluation of survey data The discussion of tbe survey results will be based upon aggregates of inputs and outputs in time, money, tangibles and services, only exceptionally tauehing an individual activities or goods when they prove to be of special interest. While analysiswill be made of both inputs and outputs of hausehold suhc;istence activity, the basis of evaluationwill be - as far as possible - tbe output (or consumption utility) of the participating households, which is depicted as the confluent of a number of utility values an tbe right hand side of tbe flow diagram of hausehold subsistence activity, see Figure 3.

1 See Asam 1978, p.14, 32f & 42f; HtlniiSch 1976, p. 56ff and Pommerehne 1987, p. 1l.ff & 238ff.

1 See, eg. Honusch 1976, p. 66; Astmt 1978; Hori 1975, p. 978; Aldershoff and Kaspar 1986, p. 309; Aldershoff 1985; Brookshire and Coursey 1987, p. 554ff; Samuelson 1954, p. 388f and Blüme/1988, p. 70.

64

4 Design and Implementation of a Survey

4.3.1 Categories oftime-use As specified above, the object of the time budget survey was not to investigate the amount and duration of time devoted to individual activities but rather to ascertain the repartition of time by members of the hausehold between different major types of utility producing time-use, i.e. 'formal' and 'informal' gainful activity, hausehold chores, do-it-yourself activity, mutual aid within social networks, and the residual 'regenerative time'.

The first major category of time-use is gainful activity/employment which was subdivided into 'on-site work', 'off-site work', 'management' and 'commutation'. The survey of time devoted to gainful activity took into account the fact that the survey participants belonged to three basic socio-professional groups: (full- and part-time) farming households, households with small family businesses and non-farming employee households. This affected significantly the classification of activities. On-site work for farmers included all work on and for animal stocks and products (excluding private retailing) and all work within and ajacent to farm buildings and silos, such as machine and construction repairs, chopping wood, shovelling snow, .. Forthose engaged in their own family businesses it included all work within the premises including preparation of off-site projects, storage and construction work. Employees noted total work time deducting pauses specified in their work contracts (=regenerative time) and travel/commutation time. Off-site work for farmers comprised field and harvest work of all kinds, loading and unloading, off-site repairs,.. Time for travel and transportation was hooked as 'commutation'. Members of entrepreneur households noted customer 'harne service', work on construction sites (without commutation) in this category. Employee's work was always classified (excluding commutation time) as 'on-site work', even if it were a travelling profession, suchastruck driver, sales representative, .. Management pertained only to tasks performed by farming and non-farming entrepreneurs and included planning, organisation, control, bookkeeping, professional training and counsel, lecture of professional

4.3 Classification and evaluation of data

65

Iiterature and advertisements, sales activity, excursions and visits of expcliitions, auctions, markets, congresses, etc. Commutation was Iimited for all participants to pure travel and transportation time to and from work and for farming and non-farming entrepreneurs to related work displacement tim es.

The second major category of time-use is time spent on household-related activities. These include: - order, purchase or other means of self-supply with consumption and utility goods and services (without travel time), - preparation of meals, comprising various auxiliary activities such as setting the table, serving, dish-washing, as well as preserving and storing food, - house cleaning and care (incl. kitchen, cellar, attic, side walks, etc.) with certain auxiliary activities, such as heating, changing beds, disposing of trash, and small repairs, - wash and care ofclothes and shoes, including machine maintenance, repairs of clothes and shoes, knitting, sewing,.. - care of children, the sick and the elderly, such as dressing, body care, medical consultation, Supervision of children's playing and homework, - household management, i.e. planning, organisation, obtaining information, corresponding with bureaucracy, - miscellaneous work, such as construction work and repairs on hause and furnishings, gardening, care of pets, garage and vehicle maintenance, - other 'side-activities' to the (indirect) benefit of hausehold members, such as school and adult education, volunteer community work, elected functions, participation in professional and non-professional associations, care of relatives outside the household, sale of handwork, .. - travel time for the above activities. 5 C6cora

4 Design and Implementation of a Survey

66

The third major category of time-use is informal productive activity which, aside from possible remuneration, is to the sole benefit of non-members of the household, often termed 'mutual or neighborly assistence'. Finally, the last major category of time-use, regenerative time, has a residual character and basically comprises time for - body care, including hairdressing, medical consultation, -lWurislunent (meals) and - leisure, including sleep. The survey of tirne-use is, of course, the directest rneasure of time resource inputs. Resource input is, however, far from giving a direct indication of the effective resultant utility output due to significant differences in productivity between individuals and according to the specific circumstances involved. As Chadeau and Schäfer1 point out, there is a great need of direct output measurement, especially in empirical research on hausehold production/housework, but, at present, the bestand mast widely practiced measure is the survey of time-inputs. Thus, an atternpt was rnade in this survey to obtain a more direct measure of the true economic performance of the members of the hausehold with regard to the utility derived from domestic (self-) services, i.e. with regard to the utility output of 'housework'. Hence, in addition to the diary survey of actual time-use described above, interview data was gathered permitting the calculation of hypothetical minimal time needs for the performance of 'housework' in accordance with the specific actual consumption of hausehold services as described by the individual participating households. Reference was made to empirically derived estimates by the KTB~ Darmstadt2 of the minimumtime necessary for the accomplishment of specifically defined domestic chores. In order to attribute an appropriate amount of time for housework to each hausehold it bad to be ascertained - whether specified tasks were performed, - how frequent the activity was, - how much effort/what degree of perfection was involved, - what techniques and facilities were used, - the size and type of dwe11ing and gardens, and - how the rooms were fumished.

' Chadeau 1985 and&häfer 1988, p. 312ff. 1

Kuratorium für Technik und Bauwesen in der Landwirtschaft.

4.3 Classification and evaluation of data

67

The employed method for time-use classification deviated, as explained above, from the strict activity classification method frequently used in time budget research. The principal difficulties encountered in activity classification are the appropriate notation of simultaneaus activities fjoint production') and the distinction between direct and indirect utility of time uses, 1 i.e. whether an activity can be or is considered tobe either a productive or aregenerative activity.2 Since the specific utility function of the members of the hausehold was of primary importance to our investigation- and not time devoted to specific activities in themselves - the participants were considered to be their own measuring rod. Hence, at the discretion of the participants time-use for 'joint production' was either divided proportionally between the time categories according to importance or, in difficult cases, attributed to the dominant activity. 3

4.3.2 Evaluation of time-use For most categories of time-use an evaluation is not necessary; a description of amounts of time involved suffices for comparative purposes. For example, while totally disregarding work productivity, a prime indicator of the (indirect) utility of gainful activity for hausehold subsistence can be seen in income from these lucrative activities. On the other band, the effects of varying degrees of productivity on utility derived from time-inputs into hausehold services4 necessitate an evaluation procedure to quantify their real importance to the total utility consumption of hausehold members. For this reason we have rejected input-oriented time evaluation procedures in favour of procedures aiming at determining the effective value of outputs (economic performances) of time-use for domestic self-services.s

t

SeeHawry/yshyn 1977.

For example, working in the vegetable garden as work or as a Ieisure pass-time; playing ball with children as child-are or as a Ieisure activity. 2

) See Quah 1986, p. 239.

• We do not want to overemphasise this point since the productivity of 'formal' Jabour time inputs is also variable. Citing a study by Stafford and Duncan, GrOIIQU points out that approximately 10% of all Ieisure time (excluding time for physiological needs) are attributable to official or inofficial work breaks on the job; see Gronau 1986, p. 286f. ' For the distinction between input- and output-oriented evaluation methods see Schäfer 1988, p. 313f and See/ in Hesse 1989, p. 61.

4 Design and Implementation of a Stnvey

68

The first step is the determination of the minimum time necessary for domestic services actually performed. The metbad used was briefly sketched in the preceeding chapter. The calculated minimum 'need of time' for 'housework' must then be evaluated. In economic literature basically three time evaluation metlwds are proposed:1 - reference to opportunity cost of time, i.e. to foregone income which would otherwise have been eamed by tbe person in question,

- analytic evaluation or reference to individual function costs on the labour market, eg. to the wage rate of a cook, a gardener, cleaning personnel,.. and - synoptic evaluation or reference to tbe market cost of an all-round (multifunctional) housekeeper. Calculation results differ significantly between tbese methods according to evaluation tests by some of the above-cited authors. 2 The ability of research scientists to determine the realistic income potential of survey participants is highly questionnable and would - at tbe least - require a research project of its own. The argument usually brought forth for the use of opportunity costs is that they are an important determinant of economic behaviour. Ferber and Green& found, however, tbat full-time housekeepers are not able to realistically assess their potential earnings or even the current minimal wage rate. Hence, they conclude that opportunity costs play no role in time-use decisions. Alderslwff also concludes tbat the 'foregone expense' approach is more appropriate for evaluation than the 'foregone wage' .4 Analytic evaluation is a metbad that has been frequently applied. In our opinion, it is not only somewhat complicated without being more accurate but is, in principle, biased towards an overestimation of the total value of hausehold services. The skills of the members of the hausehold cannot be presumed to meet

1 See, eg. Peterson 1978, p. 145; Rosen 1974; Pyun 1969; Murphy 1976; Adlerand Hawrylyshyn 1978; Hawrylyshyn 1976; Hawrylyshyn 1977, p. 95; Muellbauer 1974; Walkerand Gauger 1973, p. 11ff; Chtuieau et Fouquet 1981, p. 36ff; GoldschmUJt~lermont 1982, p. 4ff and 1987; Schu/z. Borck und Hoffmann 19&3; Hilzenbecher 1986b, p. 117; Aldershoff and Kasper 1986, p. 308; Walker in Hefferan 1980, p. 130ff; Murphy in Hefferan 1980, p. 148ff; Schäfer 1988, p. 313ff and FerberandGreene 19&3. 2

For example, Aldershoffand Kasper 1986, p. 308.

>Ferber and Greene 19&3.

• Aldershoff 1985, p. 213.

4.3 Classification and evaluation of data

69

professional standards in all tasks. The imputation of professional wages to all individual functions would thus tend to overrate the total effective utility output. We have opted here for the synoptic evaluation of the minimum time requirement for the provision ofthe specific household services consumed by the individual survey households.1 Reference was made to the current BAT2 wage rates for a housekeeper or hausehold assistance personneI. At the same time, we have restricted hausehold services subject to evaluation to quantitatively defineable economic services in which qualitative aspects da not totally govem the effective utility value and, hence, make value assessments controversial. Thus, this evaluation does not take into consideration such activities as upbringing of children, care of the sick and elderly and hausehold management. The objective is to determine only a basic, generally acceptable absolute minimum utility value which can (and should) be only a basis for more comprehensive evaluations for other purposes. In scientific research on hausehold economic behaviour, evaluations of selfservices in transportation have not yet - to our knowledge - been calculated. Although material costs of private transportation can be seen, eg. in expenditures for fuel, insurance, taxes on vehicles and purchase of vehicles, there is to date no established measure of output corresponding to transportation time-inputs. Self-services in private transportation are productive activities and provide individual consumption utilities and, hence, must be evaluated as part of 'real consumption'. The evaluation metbad used here is based on the calculation of income tax deductions for transportation costs per kilometre in the Federal Republic. The survey of self-services in private transportation by hausehold members (in kilometres per year) differentiated, among other things, according to the status of the hausehold members, i.e. - as drivers of their own vehicles, - as passengers in vehicles not belanging to members of the hause hold, and - as drivers of company cars, .. For the drivers of hausehold vehicles, DM 0,18 per driven kilometre (half the tax deduction per distance-kilometre granted for commutation to work) was calculated as 'value-added', considering that fix and variable costs were already covered in the form of surveyed expenditures. Passengers in other vehicles and users of company cars,.. do not bear fix, and frequently not even variable costs associated with the vehicles. For this reason, the imputed added value of con-

1 This cboice of evaluation metbod is supported, among otbers, by Goldschmidi-Clermont 1982, p. 18f and Schulz-&rck und Hoffmann 1983.

2

Bundesangestdltentarife

4 Design and Implementation of a Survey

70

sumption is assumed to correspond to tbe business tax deduction rate for the use of business cars, i.e. DM 0,42 per kilometre.

4.3.3 Classijication of the income and allocation ofnominal and real goods

The classification of survey material adhered to tbe classification system of tbe West German Federal Statistical Office·1 In some cases, deviations or additions were necessary but care was taken to assure basic compatibility of the survey data with statistical material, see the appendix tables.

4.3.4 Evaluation of the income and allocation ofnominaland real goods

The evaluation metbad for the use of nominal goods, especially for market inputs into 'real consumption', is quite evident: reference to tbe value of monetary transactions/allocations or to tbe paid market price. We should stress that our proposed delimitation of tbe term 'good' - and especially individual 'real goods' excludes by definition such general amenities as environmental quality2 and availability of infrastructure and services. A great deal of theoretical and empirical work has been done on the evaluation of general public (collective') and environmental goods.3 Evaluation usually takes either the form of tbe hedonic approach4 or of surveying tbe 'willingness-topay'. Individual public goods are, for reasons explained in the preceeding,5 only represented in this survey by fees paid for certain services which in most cases do not even cover factor costs.

1 See Systematik der Einnahmen und Ausgaben der Privaten Haushalte - Signierverzeichnis, Ausgabe 1983. Statistisches Bundesamt, Wiesbaden.

z Clean air, quiet, seenie beauty,..

See, eg. Whitbread 1978; McMillan et al. 1980; Brookshire et al. 1987; Getz and Huang 1978; Ulph and Reynolds 1979; Schulze, d'Arge and Broolcshire 1981; Loehman and De 1982; Shapiro and Smith 1981; Bohm 1979; Scotchmer 1981; Pfaff and kam 1978; Lee 1982; Demsetz 1970; Buchanan 1967 and Peslän and Peslän 1978. 3

• By examining earning or housing value differentials relative to differences in environmental or other locational attributes, 'hedonic prices' are estimated for specified goods. 'See Survey Design and Implementation, Chapter 4.22

4.3 Classification and evaluation of data

71

The value assessment of acquired and consumed individual 'real goods', i.e. tangibles, services and entitlements, was somewhat complicated due to the various types and sources of goods as weH as to different bases of reference. This necessitated differing evaluation procedures for different sets of goods. Inspite of flexibility in this regard, the imputation of value adhered strictly to two basic principles: - the base of reference was the (average regional) market value, 1 and - the value-assessment was uniformly applied to the data from an survey participants. The most obvious source of information about market values are price statistics. These statistics are, however, to a large degree fragmentary and often non-accessible to 'outsiders'. Nonetheless, price statistics based on surveys in the study area2 were available in the form of monthly price reports3 for most fruit and vegetables, meat, pou1try, and dairy products. This made possible a seasona1ly differentiated evaluation of garden produce, meat and dairy production as 'informal' hausehold self-supply mechanisms. In some cases (such as the price of game), individual sources of information were found; otherwise, price inquiries were undertaken by the research group orientated towards the imputation of a value located at a 'low-average' or moderate price Ievel (excluding special sales reductions/discounts). The imputed value of owner-occupied residences and of garages was derived in strict accordance with the procedures and current square-meter rent-values used by the Federal Statistical Office in Wiesbaden, which differentiate between the age of the building, the equipment/comfort of the living quarters and their (rural) location. The assumed average level of govemment subsidy of farmers' social security and health insurance plans is based on calculations by Hagedorn.4 Civil servants were assumed to have received and used fictive fixed allocations equivalent to the average survey employee's contribution to social security.

1 Gronau (1980) objects to the marlret price approach arguing that, for example, home production apparently shows that the household has explicitly rejected the market price for the utility in question. This would appear to overemphasise the importance of monetary cost for household decision-making. Our discussion of 'subsistence technology' illustrated that the household's specific utility function with respect to resource inputs and consumption is determined by a number of factors. 2

Lower Saxony.

3

ZMP-Marktberichte and surveys of the Weser-Ems Agricultural Chambre.

• Hagedom 1987.

72

4 Design and Implementatioo of a Survey

In addition to the procedures described above, households were requested to note tbe market-value of allowances-in-kind, garden produce, etc. in the diary, should they be able to make a realistic estimate. Thus, a comparison was possible between the perceived market value of the survey participants and the results of price surveys. Another base of comparison was provided by the parallel use of 'off-farm' prices1 according to agricultural statistics. These prices are received by farmers (from cooperatives, ..) for farm produce and are the measure used for tbe assessment of income-in-kind of agricultural households by tax authorities. As a rule, off-farm prices areweil inferior to the market price level.

' 'Loco-Hor pria:. Comparisons of evaluation procedurcs will be part of a subsequent publication invcstigating in detail differences in 'subsistence technology' between farming and non-farming househol!B.

5 Survey Results The analysis of survey results with respect to the role of 'informal activity' in hausehold economic behaviour will conform to the above-presented concept of hausehold 'subsistence tecbnology', see Figure 3. The importance of 'informal activity' will be illustrated by revealing its contribution to specific 'value flows' on the productive and on tbe consumptive side of 'household subsistence' during the survey year. In certain instances, due to the composition of the survey data, 1 simplifying assumptions will be made. These assumptions are, however, justified by the fact that tbey bad been indirectly corroborated in the course of tbe personal collaboration of the research team with the survey participants during an 18-month period. An initial assumption is tbat the participating households can be considered to be 'average' witb respect to the extent of their informal activity or to tbe importance ofincome from these activities.2 In accordance with the sample typology, the following analysis differentiates economic behaviour with respect to the type of employment or gainful activity of tbe survey participants. The subsamples consisted of: - housebolds engaged in full-time farming (FT-F - households engaged in part-time farming (PT-F

= 30 households) = 16 households)

- (self-employed) households with small family enterprises (ENI holds) - (non-farming) employee households (EMP

= 41 households) and

- mixed status households (change ofstatus) (MIX

1

= 10 house-

= 3 households).

The investigation of informal activity was not the sole scientific objective of the survey.

• In the concluding interview the participants affirmed that they considered their registered 'informal activity' tobe reJ:resentative of their own behaviour and of their peers'.

74

5 Swvey Results

Hence, as we had already explained in Chapter 4.2.1, the total survey sample structure is heavily biased (especially towards the agricultural sector); for this reason, the results for individual sulE!mples have, in themselves, a larger general significance than could be attributed to the total survey results which are in their stratification non-representative for the study of economically active households in the Federal Republic of Germany. In view of the fact that employee households are the largest group in both the survey sample and in the active population as a whole, our discussion will center on this group, using other hausehold groups for comparative purposes. When camparisans are made between the socio-professional subsamples, care will be taken not to generalise differences in Ievel variables (levels of income and expenditures, time-inputs, ..) since the samples are not 'representative' of their segments of the population. However, due to a high degree of uniformity in socio-economic and demographic traits, differences in the relative importance of average resource incomes and allocations (flow variables) will be very informative about differing 'subsistence technologies' in the socio-professional groups. In the appendix income and expenditure/consumption categories are presented in a scheme based on the systems dynamics view of 'household subsistence', see Chapter 4.1, which will provide tbe perspective used in the folIowing discussion of the survey results. The tables in the appendix show the average value flow attributed to the specific disaggregated resource incomes and allocations during the survey year. For the interested reader the appendix thus reveals the relative importance of individual income and expenditure categories compatible with administrative statistics. In the following, we shall Iimit our comments, however, to aggregated results for the defined flow-variables of the proposed system analysis. Further examination of details discussed below should refer to the appendix. Tables 2 and 3 present a condensed version of the results in the appendix providing a repartition of the total average value of resource income and allocation perhausehold during the survey year into major categories. The tables (and appendix) show the results in Deutsche Mark and Pfennig per year or in tenths of hours per year- not as a pretentious exaggeration of accuracy but to minimise errors due to rounding off figures and for reasons of transparency for readers who wish to make their own calculations.

5.1 Utility value and allocation of income

75

5.1 Utility value and allocation ofhousehold income in nominaland real goods from 'formal' and 'informal' sources

The flow chart of hausehold resource income and allocation, see Figure 3, shows on the left band side, beginning on the top, six types of monetary and six types of in-kind resource incomes originating outside the household. In the following discussion of the results these resources will already have been reduced to a common denominator (i.e. monetary or market value) by means of the evaluation procedures described above, see Chapter 4.3.4. In this way we shall ascertain the relative importance of the inflow and allocation of the various resources for hausehold subsistence, thus describing hausehold economic behaviour and revealing the role played by informal resources in the economic strategy of the survey households.

5.1.1 Utility value ofhousehold income in nominaland real goods

The average value of the total resource income of all members of employee households amounts to DM 83 &57,/a, see Table 2. This result represents the accumulated monetary and in-kind income of all members of the household. That is considerably more than the average income in farming households (full-time farming households = DM 75 348,/a; part-time farming households = DM 76 297,/a) but is approximately DM 22 000,/a less than the average annual income of households with small family businesses (DM 106 099,/a). Although they generally conform to expectations and to the results of income and expenditure surveys, these Ievel variables have limited relevance for our analyses. In order to verify real disparilies in average annuallevels of income between socioeconomic groups, the results would have to be based on large representative samples. Employee households were found to have an average of DM 7 086,/a in transfer income from the state and other institutions. This amounted to 8,5% of the total value of their resource income. A comparison with other hausehold groups shows for full-time farming households an even greater absolute (in terms of money) and relative importance of transfer income, and for entrepreneur households a considerably larger absolute importance of transfers from private

5 Swvey Results

76

Table 2: Monetary Inc:ome and Udllty Value Income otGoods-ln-ldnd of lhe Survey Housebolds (in DM/a) full-tiae

part-ti-

b~~~~~ds

Inca.e

employee bousebolds

entre-

preneur bousebolds

b~~~=~~ds abs.

%

abs.

%

abs.

%

Transfers (allocations/annui10847,48 144 ties/pensions) froa the state or profit/non-profit Organisations

7176,01

95

9107,62

86

7086,28

85

Cash gifts and transfers froa otber private bousebolds

9

1592,93

21

6927,96

65

2420,16

29

Incoae ( interest, dividends, •. ) 3600,88 48 froa private assets, liquidation of assets

2670,24

35

abs.

fiages/gains - ( self) e~~ploy.en t

677,39

%

20280,93 191

8334,02 100

45799,54 610 55245,54 727 56464,53 536

56504,37 674

Caab r...uneration of 'infor.al' activity

701,64

10

419,88

6

405,67

4

1747,02

21

Credit financing (mortgage, consumer credit)

670,00

9

o,oo

-

3811,11

36

4738,97

57

- Services and stocks taken froa the f.-ily enterprise 2957,61

10

349,32

3

162,01

2

Utillty Value of:

-

36

1890,27

23

1429,01

8,95

1

2,39

0

o,oo

-

,67

0

29,40

1

0,00

-

10,87

1

9853,69 133 T~lbles, services and entit e~~ents given by ~bers of otber private bousebolds

7138,07

94

7574,30

72

2431,67

30

incl.: 'housework'

7728,86

5889,80

4026,70

120,00

258,89

192,21

971,51

435,80

T~ibles, tit e~~enta

services and engraoted e~~ployees

- R...uneration-in-kind of 'infor-..1' activity

-

(incl. travel-time)

private transportatlon

services offered without recompensation - Tangibles taken froa tbe natural environaent - Goods-in-kind provided by the state or by profit/non-profit or!anisatlons, without soca led • collective goods •

Total Value of Hausehold Resource Ioco.e

230,34

3

132,55

2

97,62

1

102,13

2

o,oo

-

o,oo

-

o,oo

-

o,oo

-

---75348,19

---76297,28

106098,75

---83886,82

• Gardea producc wu. for rcaao. of comparisoa witb agric:ultural 5tati.stic:a- claui[ted as baviog bcea aiDCt.edliom a 'family enrcrprisc/farm•

5.1 Utility value and allocation of income

77

sources. 1 This was due, for example, to large-scale state subsidies of farmers' social security and healtb insurance scbemes as weil as to tax refunds from Iocal and state autborities to non-farm entrepreneurs. In general, continuous reviews and systematic ehedes of tbe survey diaries and close direct contact between the research staff and the participating households are assumed to have resulted in a more comprehensive and more accurate collection of data tban is possible in administrative statistics. This assumption would appear to be corroborated by tbe higher average annual result specified above for surveyed employee households in tbe period 1986-87 as compared to results for 'type-2' households in 1987 according to the Federal Bureau of Statistics in Wiesbaden: DM 4 812,/a.2 Cash income from other private households/persons amounted to an average of DM 2 420,/a for employee households, accounting for 2,9% of the total value of their resource income. The over-all absolute and relative importance oftbis resource was much larger in entrepreneur households (sporadic cash gifts, inheritances,..) but considerably smaller in farming, especially full-time farming households, due to the fact that employee households were practically the only recipients of regular monthly payments from other private households. On the other band, employees were tbe only group in which contributions to food and board from relatives living in close quarters with the survey hausehold was negligeable. This finding testifies to a closer economic cooperation in business and farming families between tbe elderly (retired) generation and the young families - a partiewar feature of their 'subsistence technology'. Resource income from private assets/from Iiquidation of assets in employee households reached an average of DM 8 334,/a, i.e. 10,0% of their total value income. The absolute and relative contribution of this type of revenue to the total value of resource income is - as to be expected - much larger in entrepreneur households (especially due to income from rent and leasing) but considerably less important in farming households who tend to reinvest a large proportion of tbeir capital in the farm itself.3 Once again, the tborough review and systematic checks of the diaries by tbe survey staff may have led to a higher Ievel of regis-

1 This finding corresponds to results of the German Federal Bureau of Statistics, see Statistisches Bundesamt: Datenreport 1985. Band 226 der Bundeszentrale für politische Bildung Stuttgart 1985,

p.100.

1 Calculated

from data in Angele 1988, p. 577.

A small part of the disparity between employee and self~mployed (farm and non-farm) households is due to differing definitions of 'pivate assets'. Self~mployed households usually have a joint account for private and business purposes and often pay their day-to-day living expenses with cash from the fum or farm; see 'wages/indemnifications from gainful (self-) employment', especially 'use of business funds for private expenditures' in the appendix tables. 3

5 Survey Results

78

tered income from private assets than was found for type-2 households in administrative statistics: DM 3 372Ja.1 Wage income amounted to a total yearly average of DM 56 504, for employee households representing 67,4% of the value of their total resource income. The amount of income due to gainful activities of the members of entrepreneur households and of part-time farming households was comparable; however, due to the much higher value of total income in entrepreneur households its relative importance was much smaller while just the opposite was true for part-time farming households, i.e. wage and farm income had a greater relative importance than for employee households. By contrast, the gainful activity of full-time farming households yielded, an the average, DM 10 000,/a less than employee salaries; as a result both its absolute and relative importance were lower. The results an total hausehold income for four person employee households with an intermediate Ievel of income (household type 2) participating in the hausehold account surveys of the Federal Bureau of Statistics, Wiesbaden2 showed a total average annual hausehold brutto-income of DM 50 395Ja, as opposed to our own results of DM 56 504,/a. According to the same statistics, the income attributable to other members of the family than the breadwinner in 4person-employee-households with an intermediate level-of-income in 1987 was found to be only DM 65,27/month or DM 783,24/a (brutto), whereas our own results showed an average annual contribution of DM 3 283,21/a (netto). These differences are largely due to gainful activity by spouses in the survey households, as opposed to the 'inactive' spouses in 'type-2' households in administrative statistics.

Employee households eamed an average of DM 1 747,/a from 'informal

activity' accounting for only 2,1% of the total value of their annual resource in-

come (and for only 2,3% of non-credit monetary income). The contribution of 'informal activities' was even less important to the income of farming and entrepreneur households. This result reflects the effects of a ]arger amount of potentially produclive 'free' time of employees whose workhours per week are, in most cases, limited by contract. Employees elect to use some of this time for gainful activity. The monetary income in question included non-taxable, as well as nondeclared cash eamings; illicit activities by the survey participants were presumed to be non-existant. 1t should be stressed that this finding does not necessarily indicate less participation by farming and entrepreneur households in

'SeeAngele 1988, p. 577. See Statistisches Bundesamt: Einnahmen und Ausgaben ausgewählter privater Haushalte. Fachserie 15, Reihe 1, Wiesbaden 1987, p. 58 and 59. 1

5.1 Utility value and allocation of income

79

'informal activities' from a macro-economic perspective; as entrepreneurs they may very well be engaged in such activities. The present analysis is limited to the gainful use of non-professional time for private purposes. With this in mind, we note that income from 'informal activity' amounted to only 3,1% of wage income in employee households; whereas Merz und Wolff found it to be 7,7% in their 'representative' panel interviews.

In employee households credit financing of consumption reached an average of DM 4 739Ja and thus amounted in value to 5,7% of the total disposable resource income during the survey year. Employee households demonstrated the strongest preference for this form of 'subsistence technology'; although entrepreneur households bad an average income on credit which was only DM 900,/a less than that of employees, due to the much higher total value of this group's annual resource income, its relative importance was markedly lower. The role of credit financing (for private purposes) was marginal in farming households. The major part of credit financing is harne financing; whereas farmers are to a ]arger extent owners of homes without mortgages. DM 349Ja in value of services anti stocks taken from the family enterprise were found as resource income in employee households accounting for a negligeable 0,3% of the value of their total resource income. Although the hausehold typology does not preclude, eg., that the spouse or child of an employed breadwinner be a partnerinan enterprise orthat a member of an entrepreneur or farm hausehold not also be an employee in another firm, the apparent contradiction of 'an employee having a family enterprise' requires explanation: The stated value was attributable, for the most part, to garden produce of the employee households. In order to retain the possibility of comparison with agricultural statistics, where garden produce is listed as 'use of farm goods', this item was classified accordingly for employees. As could be expected, the value of wages-in-kind in the form of tangibles, services anti entitlements from employers was highest in employee households but even here it only amounted to DM 162,/a or 0,2% of the total value of annual resource income. In other hausehold groups its contribution was completely negligeable or non-existent.

The value of remuneratwn-in-kind of 'informal activity' was also negligeable or non-existent for all groups of households.

1

Merz und Wolff1988, p. 217.

80

5 Survey Results

The value of tangibles, services and entitlements from other private households/persons was of considerable importance for all types of households, although its contribution to the total value of resource income was, by far, least important in employee households, where, with an average annual value of DM 2 432, it amounted to 3% of the total value of resource income. The absolute and relative importance of its contribution in entrepreneur households and in part-time farming households was two- to three-times as great and in funtime farming households four-times as great. This reflects, once again, the close economic cooperation in (farm and non-farm) self-employed households between the elder and middle generations. This will become especially apparent later, when the value imputed to hausehold services performed by non-members of survey households is analysed. The value of tangible environmental goods was slightly larger in farming households but, in general, not a significant contribution to the total value of resource income of any hausehold group. With DM 102, it amounted to only 0,2% of the total resource income value in employee households. Goods-in-kind from the state and other organisations (excluding so-called 'collective services') were non-existent as a contributive factor to the subsistence of households not in need with an intermediate level of income.

The above results have shown that the contribution of 'informal resources' from outside the hausehold to non-credit monetary income (DM 1 747Ja or 2,3% in employee households) was not very important (even less important in self-employed households). However, 'informal sources' proved to be the sole origin of income in real goods (tangibles and services) for all groups of households, amounting in value in employee households to DM 3 056Ja. The total utility value attributable to 'informal' sources outside the hausehold thus amounted to DM 4 803Ja or 6,1% of the total value of non-credit hausehold resource income in employee households. If this 'informal' contribution to resource income of employee households can already be considered to be nonnegligeable, its contribution to the non-credit resource income of self-employed households can be viewed as being very important. In entrepreneur households it amounted in value to DM 9 507Ja or 9,3% of resource income. In part-time farming households its value of DM 9 613Ja represented 12,6% of the total value of non-credi.t resource income and in full-time farming households its value of DM 13 753Ja amounted to 18,5% of the total value of non-credit resource income. While employees had a clearly higher Ievel of monetary revenue from remunerative 'informal activities', the members of self-employed hause-

5.1 Utility value and allocation of income

81

holds profited from considerably greater flows of utility value, especially in the form of services from non-members of the hausehold and of the use of company or farm stocks and equipment.

5.1.2 Household allocation of income in nominaland real goods In administrative statistics on the income and consumption of private households the consumption of a good is, for practical purpa;es, 1 considered to be simultaneaus with its acquisition or purchase, see Chapter 2.2. The flow analysis of hausehold subsistence procedes in the same fashion, assuming that resource flows are initiated and terminated within the survey year. Hence, monetary and in-kind goods received from the sources indicated on the left band side of the flow chart (Figure 3) and discussed in the preceeding chapter are transmitted in their entirety as inputs of nominal and real goods into consumption and other resource allocations on the right band side of the chart. Tbe average annual input of nominal goods by employee households amounted to DM 80 831, see Table 3. We recall that DM 1 747, (i.e. 2,1 %) of this input of nominal goods was 'informally earned' money and DM 4 739, (i.e. 5,7%) was on credit. Tbe input of monetary resources comprised 59,4% of total resource allocation by employee households. A comparison with other survey groups shows that the absolute importance of monetary resources was signüicantly greater in entrepreneur households (due to a considerably higher average level-of-income in entrepreneur bouseholds its relative importance approximated that for employee households) but its absolute and relative importance was considerably smaller in farming, especially in full-time farming households. On the other band, düferentiating between market expenditures (for consumption) and other allocations of monetary resources, we note that, with market expenditures averaging DM 39 671,/a or 29,2% of their total resource allocation, employee households used a larger proportion of their resources for 'market consumption' tban self-employed households. VirtualJy the entire hausehold input of real goods into consumption, i.e. of tangible consumption and utility goods, of services and acquired entitlements, may be considered to be an 'informal' input into hausehold subsistence. Tbe sole possible exception is income in and consumption of garden produce but, even

1

1n order to avoid inventories, calculalions of dep-eciatioo, spoilage,..

6 Ckora

5 Survey Results

82

Table 3: Resource Allocation by Survey Households (in DM/a) Resource Input into Hausehold Subsistence

full-tlme abs.

Input of Cash and Financial Resources (Nominal Goods) incl. private lnsurance (premiums, transfers

soc!:!tsj~~~:~~eune-,ploy-

capltal forution, interest on/liquidatlon of debts cash donatiaas and glfts

...-ket espelllliturea

Utility Value I'fut of: - owner-occupie residences ( incl. garages) - t~lble goOds recelved fra. non-•e.bers of tbe bousebold - servlces/entitlements offered by non hausehold ..,.bers incl. :-'housework' (incl. travel time): time-use evaluated at ~ -private transportation services affered without recompensation: value = tax authori ty estiaate of KM-utili ty value of comtant car - tagglbles produced y ousehold ~~e~~~bers (do-it-yourself) - self-services (household) incl. : -'housework' (without travel time): value of minimum-time necessar,r: accord1ng to BAt VI b -self-services in private transportation: value = tax authorit ' s allowance f or KM commutation to werk Total Resource Inputs in: - (real) market wares - (real) market services - real foods (i. e. non-market tan~i les, services & entltlements)

entrepreneur households

part-ti.e

h~~~=~~ils

h~~~=~~ds

%

abs.

%

62296,91 462 67104,63 509 4348,92

33

13608,91 101

abs.

%

96997,83 607

employee households abs.

%

80830,81 594 2287,9!;

29

3764.61

24

14500,48 110

9707,26

61

16722,41 123

3732,S1

17

38741,81 243

21297,62 156

5969,64 45 32771,80 243

2204,08 17 5276,76 33 35958,24 273 39034,08 245

4 502,56 39670,87 292

10756,81

80

10467,82

80

10482,20

66

6931,99

51

4692,72

35

2992,39

23

3420,31

24

2355,60

18

8737 , 43

62

6510,95

47

6001,45

34

1132,25

6

5219,64

39

10383,55

79

7728,86

5889,80

4026,70

120,20

258,89

192,21

971,51

435,80

267,88

2

48702,51 361 45478,64 2829,00

286,84

3

318,00

2

44838,83 340 42887,49 269 39628,56 40357,92 4162,50

2938,10

237,71

2

45177,73 332 41512,74 3237,81

26761,50 199 28027' 75 213 29827,13 187 30248,27 223 9422,60 70 9206,95 58 6010,30 45 7930,49 61 72778,48 539 64778,42 492 62788,62 393 55403,43 407

yields the Flow of Real Goods excl.: consu.ptlan of non .embers of the hausehold

105550,28 782 100736,66 764 101822,60 638 9 1494,65 12 1439,05 1466,01 II

95074,30 699 1191,81 9

99242,01 753 100383,55 629

93882,49 690

represents the

Real Conslllllpti on of the Survey 104084,27 771 Households

5.2 Time-allocation and its utility value

83

here, in practice tbe survey and evaluation of tbis form of self-provision is very inadequate 1 - testified by tbe fact that such findings arenot explicitly published by tbe statistical services. Table 3 shows tbat for employee households tbe combined evaluated average annual input of tangible goods received from nonmembers of tbe hausehold (DM 2 356,) and of services and entitlements provided by non-members of tbe hausehold (DM 1132,) amounted to DM 3 488, or 2,4% of total resource allocation.2 This was considerably less than in self-employed bouseholds where tbe average imputed annual utility value approximated or exceeded DM 10 000, representing in entrepreneur households 5,8%, in part-time farming households 7,0% andin full-time farming households 9,7% oftheir total resource allocation. The household's input into real consumption and other allocations of resources originating outside of the hausehold itself (or which are due to tbe use of hausehold human capital for non-hausehold entities, eg. gainful activity) is supplemented by two major resources from within the household: - the utility (rent-value) ofowner-occupied residences (incl. garages) and - tbe utility of 'human capital' inputs into tbe self-supply of hausehold members with (do-it-yourself) tangibles and services (including 'housework'). The utility value of owner-ocupied residences will be discussed in Chapter 5.3. The consumptive allocation of the household's 'human capital', i.e. of the time, qualifications and skills of the members of the household, is the subject of tbe following chapters.

5.2 Time aUocation and utility value of 'fonnal' and 'infonnal' inputs of human capital into household subsistence Having differentiated and described two forms of hausehold resource inputs, namely monetary (nominal) and in-kind (real) goods, we now turn to the third resource- the use of potentially productive time by members of the household. For reasons explained in tbe preceeding discussion of evaluation procedures a simple, undiscriminate evaluation of 'productive' time inputs is not possible. These reasons obviously have basically to do with varying degrees ofproduct-

1

See also Chapers 1 and 2.

A small discrepancy (approx. DM 430,) between the calculated value of the income and of the allocation of nominal and real goom is due to the addition to resource allocation of the value of services obtained from third parlies in exchange for services (time-inputs) of household members for non-members of the household 2

5 Survey Resulls

84

ivity/efficiency in time-use. The value of time inputs into gainful activity is, bowever, quite evident; its incamation is the salary or profit received. Thus, the value of these time allocations is already included in the value of resource income in nominal and real goods of the hausehold treated in the preceeding chapters. Accordingly, the following chapters will be limited to a simple description of time allocation by members of the survey households (in hours/year: h/a). The effective consumption value of tbese productive time inputs of hausehold members into self-provision with tangibles and services will be the object of Chapter 5.2.2.

5.2.1 Description oftime-allocation by members ofthe survey households

Being primarily interested in economic pbenomena, our attention centres on the allocation of 'productive time' of members of the hause hold. We shall, however commence with an overview of the total time-budget of tbe mem bers of tbe survey households in order to place the subsequent discussion of time-inputs into various economically productive activities into its general context. Table 4 discloses tbe fact tbat, an the average, 78,3% of tbe annual time budget of employee households consisted of regeneration!leisure activities (including sleep). lt should be pointed out that, by encompassing the time-budget of all four members of tbe household, the figures conceal influences of differing stages of tbe family life cycle on the results for tbe subsamples which have tobe taken into consideration when making comparisons, eg. small children/infants have no 'productive' time-uses whatsoever. A classical example of formal recognition of the household's growing work force potential as children grow older can be seen in the consumer/producer quotient proposed by Tschajanowl, mentioned in Chapter 1.2. Table 5 shows, however, that, although tbe age structures for children in the subsamples were not identical, differences were of a limited magnitude and strong structural similarities were considerable, especially between employee and full-time farming bouseholds, as weil as between part-time farming households and entrepreneur bouseholds. The latter groups (PT-F and ENl) might be expected to bave slightly less time-allocation to regeneration and Ieisure activities and slightly more time-inputs into 'productive' activities due to a somewhat older average age structure of the children.

1

Tschajanow 1923 and Cecora 1989.

85

5.2 Time-allocation and ils utility value

Table 4: 11me-Use by the Survey Households (in h/a) part-time

full-tiae

h~~~~~ds h~~~=~~ds

Tl11e .Ulocation

%

hla

RegenerJAtlon, lelsure

25817 737

•Housework' , incl. travel tle by parenta

2797

Galnful E~lo~t, lncl. travel-tl.el coJDUtation

4786 137

Galnful 'inforaal' JActlvlty Person/Al foraatlon, lncl. travel-tle of children; volunteer activlty, nonpald assistance, .••

%

hla

hla

26003 742 2989

80

entrepreneur households

86

4260 122

hla

25064 716 2511

%

27412 783

72

3321

95

4989 143

2419

69

16

1

20

1

21

1624

47

1768

51

2457

Total available tlae/yeJAr: 4-peraonhousehold

%

employee households

,

71

94

3

1794

52

35040 hla

Table S: Chlldren's Age Distribution withln Household Subsamples• Age group

Number of households FT-F PT-F ENT EMP

1. child over 14 2. child over 14

5

1. child over 14 2. child under 14 (school age) 1. child over 14 2 . chlld not of school age 1. child under 14 ( school age) 2. child under 14 (school age) 1. child under 14 (school age) 2. child not of school age

4

2

~T~~ort~~~Fof ~~sehE~•

3 \

6

4

3

7 I

0

0

0

\

4

4

3

8 I

4

0

1. child not of school age 2. child not of school age

4 • adudca 3

aoa~a&lifiablc

\ 15 I

\

I

\ I

\

I

37%

50%

50%

24%

13%

25%

30%

22%

50%

25%

20%

54%

bou&eholds

The comparison with self-employed households shows that employee households did have noticeably moretime for regeneration and Ieisure than full-time farming households although the age distribution of the children in the sub-

86

5 Survey Results

samples were quite similar. The somewhat lower averagetime allocations to regeneration and Ieisure in part-time farming and entrepreneur households were expected due to a slightly older age structure of the children but this certainly does not suffice to explain differences of four to seven percent. Employee households spent on the average 9,5% of their time on 'housewor/C which was c1ear1y more than the proportion of time devoted to this activity by other types of households. The imp1ications of this fact will be discussed in Chapter 5.2.1.2. Gainful employment of members of employee households c1aimed an average of 6,9% of the household's annual time-budget; this was roughly half as much time as was invested by self-employed households into gainful activities. 'Informal' gainful activity was - as measured on the annual time budget - insignificant for all socio-professiona1 groups. We take note, however, that (with an average of 0,3% of the annua1 time budget) it is approximately three times as important in employee households than in se1f-emp1oyed households.

The remaining category of time-use, 'personal formation, etc.' is too heterogeneaus and too dependant on the demographic composition of the households to be discussed on a high 1evel of aggregation. In the following we shall examine more closely the average hausehold timeinputs into 'productive' activities.

5.2.1.1 Time-input into 1ormal' gainful activity

Employee households performed a total annual average of 2197 workhours (excluding personal travel time to and from work), of which 79% were accounted for by the husband's professiona1 activity, 14% by the wife's professional activity and 7% by gainful activity of (older) children, see Table 6. Selfemployed households bad - as was to be expected and as was revealed by Table 4 - a much higher time committment to professional activity than employee households. By comparison, full-time farming households put in an average of 2,1 times as many h/a into work, the husbands averaging 1,8 times, the wife 3,3 times and the children 3,4 times of the total annual amount of work-

5.2 Time-allocation and its utility value

87

bours of their counterparts in employee bouseholds. Part-time farming households devoted, on the average, 1,8 times as many workhours to professional farm and non-farm work. On the average, busbands invested 1,6 times, wives 1,5 times and children 4,7 times as many workhours as the corresponding members of employee households. 1 The results also showed that households with small family businesses worked, on the average, 2,2 times as many workhours/a as employee households. Husbands bad, on the average, a workload of 1,6 times, wives 4,1 times and the children 4,3 times the annual workhours of their employee counterparts.2 Recent results of the time-budget survey 1985-86 of the French National Institute of Statistics and Economic Studies (INSEE) show a similar pattern of differences in work-time inputs of both men and warnen between farming, entrepreneur and employee households with the exception tbat in France wives in employee households bad a much higher time allocation to work tban in Germany.3 lt is quite apparent that in self-employed households, it is, in particular, the high average time inputs of wives and children into 'formal' gainful activity which contributes to their much higher over-all hausehold average time input. Self-employed husbands (in all cases the main 'breadwinners') worked, on the average, approximately 1,7 times as long as the breadwinners in employee households. However, wives in self-employed households worked, an the average, 1,5 to over 4 times as long as their COunterparts in employee households.

The amount of productive activity (gainful activity, housework andinformal activity) of the youngest generation depends, of course, on the household's position in the family cycle. The comparative analysis of children's age structures in the subsamples showed that self-employed households did have a slightly higher proportion of children in the more productive (older) age groups but the effect of this slight demographic difference cannot nearly explain the large differences between the subsamples. This reveals a clearly recogniseable difference in 'subsistence technology' (revealed resource input into gainful activity) between employee and self-employed households which entails less residual productive time potential for 'informal activities' in self-employed households as compared to employees. Another prominent example of differing hausehold time-use strategies can be seen in time resource inputs into (informal) 'housework', i.e. domestic self-services.

1

Note the somewhat older children's age structure in the part-time farming subsample in Table 4.

'Note the somewhat older children's age structure in the entrepreneur subsample in Table 4. >Roy 1988.

5 Swvey Resulls

88

Table 6: Repartition or tbe procluctJve tJme of members of tbe survey households

(in b/a) full-time

part-time

entrepreneur households

employee households

( 'For.al ') galnful activlty Busband Wife Children Hausehold (4 personal

3 050,8 998,7 535,8

2 803,0 450,4 732,3

2 749,0 1 231,2 670,5

1 740,8 300,6 155,8

'Bousework' Busband Wife Children Hausehold (4 personal

102,8 2 297,1 283,4

2 683,3

164,8 2 447,3 282,9

2 895,0

284,6 1 875,3 246,3

678,2 2 288,2 191,3

366,7 215,8

421,8 23,5

133,2 199,8

4,8 5,2

3 265,9

3 340,3

2 739,2

3 167,6

75,2 79,9 1 185,9

79,7 42,9 1 332,9

106,0 110,1 1 811,7

89,7 56,6 1 342,0

Galnful 'lnfor.al' activlty Busband Wife Children Hausehold (4 personal

11,1 2,4 2,1

2,9 2,9 14,3

2,2 13,4 5,0

16,8 71,9 5,6

Voluntary 'inforJUl ' activity Busband Wife Children Hausehold (4 persons)

34,1 25,9 3,4

25,6 20,1 5,3

23,5 43,4 25,4

33,8 32,4 12,2

Total 'productive tillle' (without travel time) Busband Wife Children Hausehold (4 persons)

3 274,0 3 404,0 2 010,6

3 076,0 2 963,6 2 367.7

3 165,3 3 273,4 2 758,9

2 559,3 2 749,7 1 706,9

Total travel t i Busband Wife Children Hausehold (4 persons)

174,8 117,6 241,6

534,0

233,9 82,5 313,1

629,5

264,3 135,4 379,2

778,9

224,8 144,3 242,7

611,8

150,3 28,8 22,1

212,8 9,6 51,9

239,8 55,3 42,8

171,0 34,5 15,9

Activity

h~~~=~~ds h~~~=~~ds

4 585,2

Other relatives En.ernal help* Total snnusl perfor8&Dce Slde actlvltles/scbool Busband Wife Children Hausehold (4 persons)

1 341,0

15,6

63,4

8 688,5

incl. c.,_utation to/fr011 work Busband Wife Children Hausehold (4 persons)

=

201,2

3 985,7

1 455,5

20,1

51,0

8 407,3

274,3

• External bclp Apprcoticcs, bircd domcstic aid,•.

4 650,7

2 406,1

2 027,8

20,6

92,3

9 197,5

337,9

2 197,2

3 157,6

1 488,3

94,3

78,4

7 015,8

221,4

5.2 Time-allocation and its utility value

89

5.2.1.2 Time input into 'housework' Table 7 shows that employee households were the beneficiaries of 3 168 h/a of hausehold services which were performed almost entirely by the members of the hausehold themselves. Table 6 reveals that an the average, the busband put in approximately 22% of the workhours, the wife 72% and the children 6%. 1 If farming households bad slightly moretime inputs (approx. 100 h/a) and entrepreneur households only about 400 h/a less than employee households, this result was only due to considerable time inputs to the benefit of self-employed households by non-members of the survey household. In full-time farming households the hausehold members carried only 82% of the annual workload; husbands performing a mere 4%; wives 86% and children approximately 11% of the housework done by the hausehold members themselves. In part-time farming households hausehold members carried 87% of the annual workload; husbands approximately 6%; wives approximately 85% and children 10%. The members of entrepreneur households performed themselves 88% of the hausehold services; husbands 12%; wives 78% and children 10%. The magnitude of the average contribution to 'housework' by 'third parties' well exceeded the averagetime input into housework by the breadwinner and bis children in self-employed households. Part of this extemal help is performed by hired personnel. In self-employed households the services of such personnel are most often, in effect, a benefit-in-kind derived from the family (farm) enterprise since personnel costs are covered by the enterprise (apprentices, ..).2 Here too, INSEE results for France show a similar pattem of differences between socio-professional hausehold groups relative to their time-inputs into 'housework'.3 In accordance with the results of other behavioural studies, see Chapter 3.2, there was a negative correlation between the annual amounts of women's professional work-

1 Hawrylyshyn estimated that busbands and cbildren contribute as mucb as one tbird of the value of bousebold services, see Hawrylyshyn 1976. Tbe results for employees did show that 28% of the time devoted to 'bousework' were by men and cbildren. Tbis contribution was less in self-employed bousebolds, especially in farming housebolds wbere full-time farming husbands and children accounted for only 14% of time-inputs into 'housework'.

2 For comparative purposes the value of time input of non-members of the bousehold was, not included in tbe income category 'services and goods-in-kind from tbe family enterprise'. Timeinputs by 'otber family members' can also be considered, for tbe most part, as a benefit-in-kind from tbe family (farm) enterprise since tbese relatives are almost invariably the parents or parents-in-law of tbe fanner or entrepreneur living in close proximity witb bis household and giving and receiving mutual benefits to and from tbe survey bousebold Tbis arrangement is often an official part of tbe intergenerational succession agreement in tbe family business. These bousehold services by tbird parlies were classified as services by otber bousebolds/persons.

•Roy 1988.

5 Survey Results

90

hours and hours of housework by hausehold members proving tobe statistically signüicant in two subsamples.

Table 7: HousewOI'k by/for the Survey Households • wlthout travel..flme

(in b/a) Time inputs

full-time

part-time

entrepreneur households

h~~=~~ds h~~~=~~~ds

employee households

Effectlve tliM!-use

- of hausehold members

2683

2895

2406

3158

- of non-membera of tbe hausehold

583

445

333

10

3266

3340

2739

3168

2993

2656

2608

2732

Total

lfinla1J61 need af tilM!

(according to KTBL)

5.2.1.3 Timeinput into miscellaneous side-activities The activity category 'miscellaneous side-activities' is quite heterogeneaus and consists, for the most part, of school attendance and adult education. Hence, the results (1 794 h/a for employee households) are strongly influenced by the effects of demographic variables. The category also includes, however, certain productive (collective) 'informal activities', such as volunteer community work, which are insignificant, as far as their effects on the average annual time-budget is concemed. For this reason, a disaggregation of time-budget data appears superfluous. An 'incidence analysis' did show, however, that hausehold participation in voluntary activities was - as a phenomenon - non-negligeable: Only 31% of the survey households had no voluntary engagements, as compared to 69% of the households having members performing one or more voluntary services for the community.

5.2 Time-allocation and its utility value

91

5.2.1.4 Timeinput into non-domestic 'informal activities' The category 'informal activity' presents the average annual time-input into all economic (productive) transactions between members of the survey housebolds and other entities1, excluding 'formal' gainful/professional worktime. Time budget analysis reveals that employee households bad, by far with 94 h/a, the largest average time inputs into gainful 'informal activities', often also termed 'mutual (or) neighborly assistance'.2 The figures seem to indicate that the comparatively short average professional workyear of the breadwinners and their wives in employee households not only enabled the breadwinners to participate in 'housework' to a larger extent than in self-employed households but, at least indirectly, also made possible a comparatively large engagement of employee wives (72 b/a or 77% of tbe total hausehold time input) into gainful 'informal activities'. The average annual time inputs into this type of activity in self-employed housebolds was in the magnitude of 16 to 20 h/a. Differences between the self-employed subsamples in this regard da not appear to be systematic or fit into any pattem for explanation. Employee bouseholds performed an average of 78 h/a of non-remunerative 'informal activity' within social networks, mainly voluntary aid of other persons/bouseholds. A great part of activity to the benefit of third parties is in favor of the parents/in-law of husbands/wives in the survey households, such as care of the sick and elderly. When figures for self-employed households, especially for farming bouseholds (see Table 6), are examined in relation to the results found for the contribution of third persans (especially in-laws and parents) to the performance of 'housework' for the survey households (see Table 7), the overbalance of the utility flow in direction of the survey households is striking. Here again, we observe differences in 'suh>istence technology' between the subsamples. Entrepreneur households were found to have a somewhat larger average time-input, farming households a smaller average time-input into non-paid 'informal activity'; these would appear to be either chance differences or due to variables which were irrelevant for the delimitation of the hausehold subsamples.

1

Private persons, households, enterprises.

2

No conclusion can be drawn about the (illicit) nature of these activities.

92

S Survey Resui1S

5.2.1.5 Total productive use oftime The examination of the findings for the total annual hausehold time-input into all productive activities excludes travel time (eg. to and from work, school, shopping, ..). The average annual travel time varied between 534 h/a and 779 h/a (employees: 612 h/a), see Table 6. The average annual travel time in the subsamples depended on a number of factors irrelevant for the group analysis in question. The results on trave1 time did, however, help discard any notion tbat farming households spend less time travelling in connection with their work due to their living on farm premises. The average total annual hausehold time-input into productive activities revealed basically the same differences in annual workloads between subsamples that were found for 'formal' gainful activities, i.e. employee households bad with 7 016 h/a - the lightest workload; the heaviest being that of entrepreneur households, followed by full-time and part-time farming households. Especially noteworthy was, however, the fact tbat time-inputs into (informal) 'housework' and into gainful and non-remunerative 'informal activities' resulted in a significant decrease in disparilies between the hausehold groups. Thus, the time-input ratios between entrepreneur and employee households diminuished from 2,2:1, when only 'formal' gainful activity is considered, to 1,3:1 for total productive activity. In full-time farming households in comparison with employee households the ratio decreased from 2,1:1 to 1,2:1 and the comparison of parttime farming households to employee households showed a ratio decreasing from 1,8:1 to 1,2:1. This illustrates a significant difference in time resource allocation (subsistence technology') between the subsamples. A closer examination of the figures showed that the difference in total time-inputs into productive activities between entrepreneur and full-time farming households was due to considerably larger time-inputs of 'entrepreneur' children into 'side activities', especially school - a result which is influenced by the demographic cornposition of the subsamples. A cornparison of only adults in the subsamples, eliminating distortions due to differing children's age structures, shows that both full-time farming rnen and their spouses bad a 'langer' average workyear than their 'entrepreneur' counterparts and part-time farming adults a slightly 'shorter' average workyear. Apart from part-time farming households, where men bad, on the average, approximately 100 h/a more productive time than their spouses, gender analysis showed a slightly 'heavier' average annual female workload in the subsamples, which can be considered to be the result of large time-inputs into 'housework'.

5.2 Time-allocation and its utility value

93

5.2.2 Utility value of time-use by members of the survey houselwlds

The net product of time-inputs, i.e. tbe derived utility, depends an a number of factors, such as an tbe motivation, tbe physical and mental capacities of tbe persans involved as well as an the technology and equipment at their disposal. Since the utility value derived from domestic self-services ('housework') and from do-it-yourself production by hausehold members for their own needs is an essential part of their 'real consumption', differing degrees of productivity bad to be taken into account in tbe search for an appropriate measuring rod. As explained in Chapters 4.3.1 and 4.3.2, tbe minimum time needed by individual housebolds to meet tbeir specific needs for hausehold services were calculated according to empirically based Standardsand tbeir market value assessed using synoptic evaluation metbods. Do-it-yourself production of 'market replacement goods' were evaluated according to tbe current market prices of tbe tangibles or services in question. Table 3 shows tbat in all types of households only an insignificant contribution was made by hausehold 'did-it-themselves' production of (tangible) 'market replacement goods' to tbeir 'real consumption' (0,2%). By contrast, the utility value of self-services amounted in employee households to approximately one third of tbe entire resource allocation and to almost half of tbe utility input into the household's 'real consumption' which itself consumed an average of 69% of the total resource allocation by tbe members of employee households during tbe survey year. The table shows that the ma;t important element of tbese self-services were domestic self-services. 1 In employee households tbe value of harne production of domestic services ('housework') amounted to 74% of hausehold netto wage income. Gronau bad estimated that in the U.S.A. in 1973 the value of home production corresponded to 60% of hausehold bruno and 70% of tbe netto wage income, see Chapter 3.2. These results would appear to concur.

1 The value of domestic servioes rendered by non-members of the household was not deducted from the assessed value of self-servioes because it was not possible to ascertain whether the extemal help bad alleviated the basic needs of the bousebold members or wbetber it bad merely been supplemental. This is illustrated by the fact that, eg., the effective average time-input of the members of two survey bousehold subsamples surpasses, even without extemal help, the minimum time need defined by tbe KTBI..., see Table 6.

94

5 Survey Results

5.3 Utility value of owner-occupied residences for household subsistence The utility of owner-occupied housing (incl. garages) was evaluated according to the procedure described in Chapter 4.3.4; the assessed value reflects directly the age, comfort and location of the housing facility in question. Farming families inhabited in general somewhat older buildings but their degree of comfort reaches approximately the quality level of other households. 1 It is especially the much larger living space perhausehold which is reflected in the fact that in farming households the corresponding proportion of total resource allocation is 8% as compared to 5% in employee households. Relative to its contribution to 'real consumption', the share of rent-value is 12% in farming and 8% in employee households.

5.4 The 'real consumption' ofthe survey households and a review ofthe contribution of 'informal' resources The assessed average annual value of 'real consumption' of economic utilities by employee households amounted to DM 93 882ja or 69% of its total resource allocation, see Table 3. The consumption share of total resource allocation was, as could be expected, quite smaller in entrepreneur households (63%) due to a higher average total income; on the other band it was much larger in full- and part-time farming households (77% and 75% respectively) who had a lower average resource income. Nevertheless, the absolute figures do show that disparities between the subsamples suggested by unfavourable 'formal' economic data about the income of farming households do not apply to their effective levels-of-living - as measured by the utility value of 'real consumption'. Farming and other self-employed households in the sample succeeded in maintaining a level-of-living even superiortothat of the corresponding employee households (at the cost of considerably !arger time-inputs than those of employees). To avoid misunderstandings it should be reiterated here that the samples were not representative samples. Hence, the result just elucidated does not purport to suggest that the average level-of-living in farming households is, in general, higher.

1 An analysis of the age of homes of the survey participants according to socio-professional categories showed that differences in the age of residential buildings (older homes of farming families) were statistically significant, whereas the housing quality, as measured by insulation, was not The survey indicated that approximately 12% of the survey households lived in buildings in need of improvement of insulation.

5.4 'Real oonsumption' and 'informal' resources

95

lt does reveal, however, how deceptive for welfare analysis the sole interpretation of 'formal' economic data can be because of differing 'subsistence technologies'.

In the intrcx:luction we stated that the role of 'informal activity' in hausehold economic behaviour would be investigated by determining its relative importance for the household's level-of-living. We consider the directest measure of the level-of-living to be the household's 'real consumption'. Assuming that monetary income from 'informal activity' be used solely for consumptive purposes (as opposed to social security, capital formation, insurance, gifts, etc.), we note from Table 8 that 'informal activity' accounts for over half (i.e. 53%) of the assessed utility value consumed by employee households. 'Informal activity' made a relatively larger contribution to the 'real consumption' of farming households, especially of full-time farming households - a fact which helrs explain the above-mentioned reverse of disparities between the subsamples when the investigation passes from 'formal' monetary income to the households' level-ofliving (real consumption'). Another contributative factor was the higher average utility value of owner-occupied residences in farming households - a factor with certain 'informal' traits since the real dimension of living space is, as was substantiated by our survey, very frequently grossly understated.

5 Swvey Results

96

Table 8: Contribution oC 'informal acüvlty' to 'real consumption' (in DM/a) full-Ume

part-u...,

entrepreneur households

employee households

105 550,28

100 736,66

101 822,60

95 074,30

701,64

419,88

405,67

1 747.02

2 957,61

1 890,27

1 429,01

349 32

8,95

2,39

o,oo

162,01

,67

29,40

o,oo

10,87

9 853,69

7 138,07

7 574,30

2 431,67

Environmental ( tangible) goods

230,34

132,55

97,62

102,13

Do-it-Lourself (tangi le) goods

267,88

286,84

318,00

237.71

Self-services incl. 'housework' and priv. transportation

48 702,51

44 838,83

42 887.49

45 177,73

Total 'infor-.al lnputs • into the total flow of real goods

62 723,29

54 738,23

52 712,09

50 218,46

h~:~:~::fds Total flow of real goods Monetary income from informal activity' In-kind benefi ts from family enterprise/ garden produce In-kind benefits for employees In-kind ~a}'Oient of 'informa activity' Services, t:nfibles, entitlements rom brivate persons/ ouseholds

'Informal' share of the total flow of real goods to 'real consu.ption'

60%

h~:~=~::fds

54%

52%

53%

The results presented this far in Chapter 5 provide us with the data basis for checking the hypotheses proposed in Chapter 3.3:

Figure 5, which depicts (using three different scales) the relative importance of resource incomes, of time allocation and of resource allocations for hausehold subsistence, and Tables 2 and 3 give ample evidence that, as hypothesis 1 states, 'informal' activities do indeed contribute significantly to the level-of-living (real consumption) of the survey households - even when minimum evaluation procedures are used.

5.4 'Real consumption' and 'informal' resources

97

98

5 Swvey Results

The largest share of the consumed utility value of 'informal' resources was, as proposed by hypothesis 2, attributable to domestic self-services by members of the survey households. Table 3 shows an average annual value of DM 41 513, in employee households. This assessed value and relative importance of 'housework' perforrned by members of the hausehold is inferior to previous rough calculations of the relative importance of hausehold self-services for real consumption by the author. 1 This difference is intentional and is due to a more restrictive calculation of the minimum time necessary for the performance of hausehold chores by excluding from the calculations a number of previously evaluated activities of which the value is predominantly a question of qualitative, rather than of quantitative aspects, see Chapter 4.3.2. Thus, the current evaluation was restricted to the activities specified in the KTBL activity list, whereas other activities (which were included in the survey of the households' time-budget), such as children's upbringing, shopping time and hausehold management, did not figure in the evaluation. Time-inputs into such activities are frequently included in the evaluation of hausehold self-services and, of course, Iead to higher imputed values. 2 By contrast, the present calculation went into great detail with respect to tbe frequency and intensity of performance of a smaller number of activities in each survey hausehold and, thus, purports to be not only more accurate but also tobe an estimation of the absolute minimum value of domestic self-services. Tables 2 and 3 show, eg. for employee households, that the average value of garden produce (DM 349,32) and 'did-it-themselves' tangible market replacement goods (DM 237,71) amounted to 0,7% of the average value of total real consumption - a sbare that can hardly be considered to be significant, see hypothesis 3. Due to a comparatively large amount of garden produce in farming households, these 'informal activities' were somewhat more important for their 'subsistence technology'. Tables 2 and 3 also reveal for employee households that the average value of tangibles, services and entitlements provided by nonmembers of the hausehold (DM 2 431,67) amounted to 5,4% of the combined average values of self-services (DM 45 177,73) and do-it-yourself goods (DM 237,71). This cannot be considered tobe only a small fraction (see hypothesis 4), especially when a Iook is taken of the situation in self-employed households where, for example, in full-time farrning households the average value of resource income from non-members of the hausehold attains 20,2% of

1 See Cecora 1985. Due to a Iack of data the previous estimation of household time needs for 'housework' bad been essentially limited to ascertaining whether certain tasks were performed and, in the affirmative, calculating KTBL lump estimates of averagetime requirements.

z See, eg. results of Aldershoffet al. quoted in Harsch 1986, p. 516.

'Real consumption' and 'informal' resources

99

the average value of 'household production'. 1bis reflects, of course, the contribution of parents (-in-Iaw) living spatially and econornically in close proxirnity to the farrning farnily. Noting that a large share of the utility value of services and stocks taken frorn the farnily enterprise is, not only in ernployee households, the value of garden produce, allowances-in-kind frorn farnily enterprises would indeed appear to be alrnost negligeable, see hypothesis 5. Table 2 did show a greater irnportance of transfer incorne in farrning households, as proposed by hypothesis 6. 1t also corroborated hypotheses 7 and 8 which presupposed a lesser importance of incorne frorn capital assets and frorn Cforrnal') professional occupations in farrning as opposed to non-farrning households. A greater irnportance of incorne frorn 'informal activity' in farrning and other self-ernployed households than in employed households, as proposed by hypothesis 9, was not corroborated by the results which seern to indicate that the opposite be true, see Table 2. As hypothesis 10 states, and Table 2 shows, credit incorne (to a large extent for rnortgages) was found tobe less irnportant in farrning households than elsewhere. The rnuch greater irnportance of goods-in-kind as a resource incorne in selfernployed and especially in farrning households, presupposed by hypothesis 11, was clearly supported by the findings in Table 2. The findings in Tables 4 and 6 also support hypotheses 12 and 13 which assurne a greater tirne-input into professional occupations and less tirne-input into 'housework' by the rnernbers of self-ernployed households as cornpared to ernployee households. A higher average rent-value was irnputed to farrning households in Table 3, due to the facts that their living space is considerably }arger and that their living cornfort approxirnately on par when cornpared to other socio-professional groups. Hypothesis 14 was, thus, supported by the findings.

100

5 Survey Results

Hypothesis 15 was clearly supported by the findings in Tables 3 and 7 regarding the greater utility value contributed to household real consumption by non-members of the hausehold in farming as compared to non-farming households. According to responses in the standardised interviews, the households (with only one exception) considered the results of their diariestobe 'typical', as far as the extent of their 'informal activity' as a source of income was concerned. Only 2% of the participants declared that they intended to increase activity of this sort. When asked to select the three most important reasons why members of the hausehold resorted to do-it-yourself activity instead of purchasing market wares and services, the survey participants named in the following proportians the corresponding reasons: 67% - Cannot afford the high prices. 55% - Taking advantage of our own knowledge and skills. 39% - Just for the fun of it. 20% - Had to do the job quickly. 9% - Taking advantage of friends' knowledge and skills. 8%- To help save money. 5%- Commercial infrastructure is too far away. Thus, do-it-yourself production is not only considered to be an economic resource; in addition to its (indirect) utility as a source of hausehold income-inkind, it was the direct utility of satisfaction derived from such time-inputs which motivated the members of the survey households.

S.S Economic bebaviour - as described by tbe 'subsistence tecbnology' of private bousebolds

The model of hausehold economic activity proposed in this study was successfully filled with empirical data - demonstrating that it is possible to quantitatively describe hausehold economic behaviour, including so-called 'informal activity', by analysing hausehold 'subsistence technology', i.e. the income and allocation of the economic resources of all members of the household.

101

5.5 Economic bebaviour described by 'subsistence technology'

We based our study on the assumption that each hausehold has its own specific utility fuoction which, in turn, determines its 'subsistence technology'. Accordingly, groups of households having similar utility functions (be the simiIarities due to common tastes, habits, cultures or economic potentials) would tend to have related 'subsistence technologies'. Table 9 shows, on the one band, that differences found in the average levels-of-Iiving between the socio-professional subsamples, as defined by the utility value per year of their 'real consumption', is not statistically signüicant. Thus, on the group aggregate Ievel, our efforts to obtain survey participants witb a comparative Ievel-of-Iiving would appear to bave succeeded. On the other band, Table 9 shows, furthermore, that (with the exception of a few heterogeneaus or relatively unimportant categories) differences in resource income and allocation between the socio-professional survey groups did prove to be statistically significant. 1

Table 9a: V..tance analysls oCsoc:lo-proCesslonal dltrerenc:es in 'subsistenc:e te)

•• = marted sipific:aace (p • I") • = •ipifiCODcc (p = S")

*

6 Summary The quest for explications of trends in economic activity documented in administrative statistics has Iead to increased interest in economic activity escaping direct observation and measurement. lt is frequently suggested that such activities play a !arge and growing part in the national economy in general, and that better knowledge of their dimension and development is imperative for effective economic and social policies. Within this context, the productive activity of private households - almost completely ignored in national accounts - is of particular importance. The objective of this study was to ascertain the role of statistically unsufficiently documented 'informal' produclive activity by members of private households in view of reaching and maintaining the household's given level-of-living. This required a calibration of the entire spectrum of 'real income' and of allocation of economic resources by hausehold members. To this effect a comprehensive survey was conducted in 100 carefully selected households with relatively homogeneaus socio-economic and demographic characteristics. The in-depth study of the inputs and outputs of hausehold economic activity during the survey year disclosed the importance of 'informal' activity for the households' 'real consumption' - a comprehensive indicator of the households' level-of-living. Contrary to expectations engendered by the importance attributed in current literature to 'informal' phenomena on the macro-economic scale and by the results of certain recent questionnaire surveys, 'informal activity' generating monetary or in-kind income was found tobe rather insignificant. However, the economic utility produced by non-gainful economic activity of the hausehold members, principally for their own consumption, was considerable, even on the basis of a stringent evaluation. This was mainly in the form of self-services, especially domestic self-services ('housework'). The effective utility value of doit-yourself production of tangible goods turned out to be less important than expected. The study achieved its goal of quantitatively describing hausehold economic behaviour- including its 'informal' components. Furthermore, it demonstrated,

104

6 Summary

and verified statistically, the fact that hausehold economic behaviour can vary according to, among other things, socio-professional characteristics of family households. A comparison of socio-professional subsamples illustrated the inadequacy of 'formal' economic indicators for assessing the level-of-living of private households and, hence, their limited relevance for welfare policies.

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full-time

o,oo

435 , 59 129,87 1 702,23 4 594,65 201,09 97,08 1 173,51

o,oo

136,48

o,oo o,oo

118,95 222,28 477.44 1 715,09

7 773,56 3,88 1 332,80 10 102,16 1 061,84 6,69 0,00

Income from rent and leaaing Interest, dividends, etc. from financial assets Liquidation of tangible assets and real estate Liquidation of financial assets Irregular payments from private Insurances Refunds for purchases, refunds of depoaits Cash withdrawls from private bank accounts (employees)

443,56 573,90 106,32 430,96 0,00 46,14

8 334,02 2 670,24

3 600,88

20 280,93

Capltal galns and llquldatlon of assets

97,56 1 163,34 1 154,38 4,88

5,18 11,25 32,17 1 132, 94 416 , 57

14,87 6, 74 512,94 142,84

Return of lent money Running transfer paymenta Cash glfts and inheritances Contrlbution to expenses for food and board

6 316,11 606,67

o,oo

2 420,16 6 927,96

o,oo o,oo

52,68 153,04 2 173,10 612,93 1 811,40 1 521,23 89,16 672,74

o,oo o,oo

7 086,28

e•ployee households

452,93 1 595,56 372,56 5 540,55 878,79 0,56 266,67

o,oo

9 107,62

entre-

preneur householda

1 592,93

178,42 126,47 2 446,56 780,62 1 073,52 110,63 19,21 563,45 1 644,60 232,53

7 176,01

h~~~=~~ds

part-time

677,39

749,33 448,36 786,42 357,21 54,75 311,18 3 687,65 2 838,04

614,54

10 847,48

h~~~=~~ds

Cash glfts and transfers fra. other households

Running pensions, social securi ty, annui ties, •• Running unemployment compensation Running welfare, income support (for children, aaternity, •• ) Irregular payments from welfare and social security Irregular payaents from governmental bodieo (tax refunds, •. ) Runnlng payaents from private Insurances and pension plans Income from non-profit organisations, gambling, •• Reimburee•ents for expenses for volunteer work State subsidy of farmers' pension plan State subsldy of farmers' health lnsurance plan

Honetary transfers fra. publlc and private corporatlons

lleaource .....,._

COMPOSITION AND VALUE OF FLOWS IN RESOURCE INCOME AND ALLOCATION (in DM/a) in 4-person-households (2 parents/2 children) with an intermediate income-level in rural areas, 1987

~

1:1

i

>

~rk

lncoae

full-time

Cash withdrawls from joint (private/business) accounts

Value of state subsidy of civil servants' pensionplan

37 594,00

o,oo o,oo

237.40

Employero' contribution to employees' health insurance

Employers' contribution to employees' unemployment inaurance

30,74

Employero' contribution to employees' social security

Entrepreneur'• voluntary contribution to private health insurance

9 530,77

269,18

843,26

2 550,58

2 018,87

0,00

o,oo o,oo o,oo

Entrepreneur'& voluntary contribution to private penaion plano

273,57

3 338,87

Farm'& contribution to the farmer's health inaurance plan

852,12

843,26

2 550,58

2 018,87

545,03

1 910,70

o,oo

237.40

30,74

0,67

41 421,26

o,oo

830,15 2 399,06

o,oo

2 239,45

3 718,54

0,00

o,oo o,oo

0,00

830,15

2 239,45

3 718,54

117,13

705,86

o,oo

82,34

140,84

0,00

0,00

4 923,61

4 501,97

o,oo o,oo

140,84

0,00

0,00

o,oo o,oo

4,39

556,81

302,40

o,oo

o,oo o,oo

859,55

39 623,70

o,oo o,oo

56 504,37

eaployee houaeholda

5 029,22

56 464,53

entrepreneur

houoeholdo

o,oo o,oo

Farm'o contribution to the farmer's pension plan

Employeeo' deduction for unemployment insurance

Employees' deduction for health insurance plan

Employees' deduction for social security

- reimbursements(travel costa, •. )

Irregular payments from employers- premium&, ••

Income from the direct aale of (non-farm) services and products

o,oo

10,63

31 522,46

55 245,54

h~:~=~:;fd.

part-time

1 236,43

90,33

Income from 'horseback-riding touriam' on the farm

Income from the direct aale of agricultural producta

46,27

1 045,99

45 799,54

h~:~=~:;fd.

Income from 'tour1st accmoodation' on the far•

Netto-income (ealary) of eaployees

Professional

...........,.. t.ac.-

COMPOSITION AND VALUE OF FLOWS IN RESOURCE INCOME AND ALLOCATION (in DM/a) in 4-person-households (2 parents/2 children) with an intermediate income-level in rural areas, 1987

~

f

00

-

full-time

349,32

162,01

1 429,01

o,oo 0,00

1 190,27

2,39

29,40

2 957,61

8,95

0,67

Employee beneflta

Ra.uneratlon-ln-klnd of 'Jnforaal actlvlty'

o,oo

incl. wages-in-kind/servicea from employer/e•ployee diacounta

incl. garden produce, value of all services and tangiblea

Services, goods-ln-klnd derlved fr011 fa•lly enterprlse/far•

670,00

3 811,11 0,00

o,oo

Hortgagea, real eatate loans Consu.mer credi t

3 111,11

o,oo

670,00

o,oo

10,17

4 117,02 621,95

4 731,97

18,30 1 718,29 10,43

Credlt lnca.e

o,oo

405,67 0,00

0,32 418,93 0,63

1 747,02

employee houaeholda

0,17 448,47 253,00

405,67

entre-

preneur houaeholda

Incoae froa the aale of aelf-made producta Inco.e froa 'informal' servicea/work Inco.e froa the aale of tangible environmen~al gooda

419,11

h~~~=~::fda

part-tillle

701,64

h~~~=~::fda

Inca.e fr011 'lnfor•al actlvlty' for non--bers of the bowlehold

............,., I.ao:


~ §,

u.:c.e

of of of of of of

tangible glfts received Services received (e:rcl. 'housework') tangibles received in e:rchange services rendered in e:rchange hausehold services received private transportation oervices received

Tanglble 'collective goods' 'collectlve oervices' not surveyed)

Tsnglble envlronaental goods

Value Value Value Value Value Value

Inca.e-ln-klnd [rum other households

lleaaurce

entre-

preneur

120,20 435,80 97,62 0,00

132,55

o,oo

230,34

o,oo

o,oo

102,13

o,oo 4 026,70 971,51

7 728,86 258,89

o,oo

1 718,51 144,39 12,77 2 173,79 388,42 13,88

882,61 110,53 55,17 7. 75 5 889,80 192,21

1 463,90 362,80 39,24

o,oo

2 431,67

employee households

7 574,30

hauseholde

7 138,07

h~~~=~::fds

part-time

9 1153,69

h~~~=~::fds

full-time

COMPOSITION AND VALUE OF FLOWS IN RESOURCE INCOME AND ALLOCATION (in DM/a) in 4-person-households (2 parents/2 children) with an intermediate income-level in rural areas, 1987

~

f

~

-

for

Food, beverages1 tobacco Food away from no•e Clothlog Shoes Repalrs of shoes and clothlog Wa ter /sewage Garhage dlsposal Other hauslog 'slde costs' Rent for rooms away from halle Energy Repair and malntenance of heatiog systems Furniture Rugs and home te>:tlles ~:bl!~a~~~ ~~~k~~n=~~!lances, electrlcal appllances, lncl. lamps Hausehold consumption goods Repairs and Installation of hausehold gadgets/machlnes Wages of hausehold personnel Wall paper, paint, small repairs of liviog quarters Consumption goods for health care ~!~}~;r ~~~eic!~r heal th care Consumption goods for body care Utility goods for body care Services for body care Vehicles and bicycles Car leasiog fees Utility goods for vehicles, bicycles Fuel (without vacation) Consumption goods for vehicles, bicycles Repair and maintenance of vehicles, bicycles ~~h~~~~ri~;~~~n~:rvices (without vacation) Vehicle tues Communication (telephone, postage, .• ) TV-sets, radios, hi-fi, cameras Other utility goods for education and leisure Books, newspapers, perladleals Consumption foods for education and leisure Instruction ees (wlthout drivers' education)

Flow of na.lnal goods, l.e. E11]lendltures

lleeaarce allocaticm

o,oo

133,29 138,40 15,07 641,27 94,27 667,59 316,12 749,02 296,91 478,92 559,95 238,06 441,16

8 172,17 644,83 3 290,17 803,78 23,07 401,17 159,02 87,80 50,00 3 397.74 211,28 807,66 401,10 489,03 415,39 513,10 569,39 107,49 675,83 67,97 47,19 302,04 450,38 56,84 223,08 391,30

62 296,91

h!~~=~:;Jds

full-time

275,43 110,41 22,77 244,86 456,40 20,24 287,08 2 367,47 62,28 251,88 412,12 51,35 091,29 187,93 707.59 313,20 698,66 190,54 492,52 752,41 228,58 292,19

o,oo

7 565,49 980,04 3 646,11 745.75 19,01 445,35 133,36 64,66 267,50 3 420,93 258,69 311,70 500,92 532,02 364,82 353,50 437,24

67 104,63

h!~~=~:;Jds

part-time

2 697,88 500,36 968,64 337,31 430,57 337,49 296,50 214,57 0,00 060,74 165,05 67,56 294,48 522, 76 22,85 322,68 649,95 83,95 289,28 355,12 24,30 677.98 124,15 630,08 311,93 779,11 438,07 726,83 572,64 221,69 392,45 3 527,59 90,27 500,81 250,14 304,36 137,04 236,89 288,65 407.22 557,43 181,09 16,07 265,04 338,76 8,17 231,66 459,89

o,oo

192,79 193,52 18,69 154,30 184,39 612,43 287,16 680,01 7,33 500,06 572,67 299,34 239,56

o,oo

8 552,74 1 126,03 3 020,22 656,35 29,26 399,48 133,04 68,95

7 784,92 443,28 3 093,97 635,52 70,33 461,48 176,99 87,94

o,oo

10 130,11

employee households

96 997,13

entre-

preneur households

COMPOSITION AND VALUE OF FLOWS IN RESOURCE INCOME AND ALLOCATION (in DM/a) in 4-person-households (2 parents/2 children) with an intermediate income-level in rural areas, 1987

N

-

t

Fees for boardlog schoola Services for education and leisure (without vacation) Planta, garden needs Animals and animal care Repair/ install. ( utili ty !oods-education/leisure/ acceasories) Personal accessories (lnc. watches, clocks, jewelry, •• ) Funeral articles Vacation Services of credit Institutions and Insurances Hiscellaneous resairs and services Compulaory wage eduction for social security Compulsory contribution to farmera' penaion plan Compulsory wage deduction for health insurance Compulsory contribution to farers' health insurance Compulsory wage deduction for unemplo)'lllent insurance Voluntary contribution to social security Voluntary contribution to farmers' pensionplan Voluntary contribution to health insurance plano Voluntary contribution to far•ers' health insurance plan Voluntary contribution to private old-a~e Insurances Voluntary contribution to private healt Insurances Insurance for liability, accident, theft and damage Interest on/repayment of mortgage loans Interest on/repayment of consumer credlt Purehase of real estate, transaction and buildlng costs Purehase of gold, precious metals Real estate ta:r/ insuranee, maint./repair of buildings Saving de~osits, financial Investments Premiums or life and other personal Insurances Lending money to non-members of the households Hembership dues Donation& Transfers to other private households Administrative fees (eourt fees, penalties, .. ) Gambling s takes Hiseellaneous 'transfers' inel. thefts and losses Professional needs Poeket money Living costs (lump sum) of boarders away from home Purehase of gifts for non-members of the household Cash gifts Reinvestment in family business/farm Hereditary leasing of living quarters Rent Employers' contribution to employees' soeial seeurity Employers' eontribution to employees' health insurance

&e.ource allocatlcm

30,74 237,40

o,oo o,oo

1 209,14 178,14 2 429,65

o,oo

402,57 1 275,88 835,41 3,33 0,00 1,68 496,33 1 375,63 2 405,45 3,00 261,58 170,78 5 354,47 61,88 46,38 1,67 o, 78 525,78

o,oo

304,00 248,00 254,00 88,80

o,oo

718,56 431,08 195,99 84,76 138,44 19,65 775,56 31,23 126,92 30,74 1 910,70 237,40 3 338,87

o,oo

h~~~=~~ds

full-tlme

o,oo

o,oo

266,67 0,00

343,75 2 018,87 2 550,58

o,oo

636,32 0,00 1 370,49 113,33 1 735,55

o,oo o,oo

2 060,25 3 834,27 2 013,14 225,87 121,03 210,97 4 605,56 186,15 44,97

o,oo

368,33 945,97 139,04 847,01 26,64 22 471,78 2 3 1 5

977,64

o,oo o,oo

0,00 140,84 2 133,64

o,oo 0,00 o,oo

559,55 345,08 81,57 9, 77 115,14 0,00 4 042,92 55,84 8,40

o,oo

entrepreneur

households

354,12 118,08 1 301,13 179,45 172,35

o,oo

231,77 29,53 1 757,70 12,57 90,53 5,63

o,oo

657,10 4 547,52 2 245,44

o,oo o,oo

280,50 779,48 1 171,19 735,28

o,oo

65,63 56,93

o,oo o,oo

143,19 817,19 246,93 180,04 12,23 170,28 76,18 1 553,58 71,82 98,04 2 018,87 852,12 2 550,58 273,57 843,26

h~~~=~~ds

part-time

o,oo

7,98 772,67 3 718,54 2 239,45

1

5 1

4

5

797.78 656,50 638,48 609,01 528,46 3,35 622,82 719,33 001,37 0,00 248,37 121,09 2,44 37,47 185,73 3, 76 1,65 383,49 99,53 079,29 126,90

o,oo

0,00 633,83 0,00

o,oo

653,54 335,50 204,60 39,35 238,80 9,09 2 258,10 86,40 26,25 3 718,54 0,00 1 554,91 0,00 830,15

o,oo

e•ployee households

COMPOSITION AND VALUE OF FLOWS IN RESOURCE INCOME AND ALLOCATION (in DM/a) in 4-person-households (2 parents/2 children) with an intermediate income-level in rural areas, 1987

>