Originally published as Spousonomics
|Publisher:||Random House Publishing Group|
|Product dimensions:||5.32(w) x 7.86(h) x 0.78(d)|
About the Author
Jenny Anderson is a New York Times reporter who spent years covering Wall Street and won a Gerald Loeb Award for her coverage of Merrill Lynch. She currently writes on education and lives with her husband and daughter in Manhattan.
Read an Excerpt
Division of Labor
Or, Why You Should Do the Dishes
The Principle, Part One
Who should do what?
It’s one of the first questions Fortune 500 companies, governments, and gas stations have to answer if they plan on getting anything accomplished.
Consider your local Hess station. It wouldn’t exist without the truck drivers who delivered the concrete that was then poured and shaped into a foundation by a team of construction workers—not to be confused with the other team of construction workers who built the quickie mart, which is now staffed by a cashier in a green vest who sells the Ho Hos that were brought by the Hostess man with the “FBI: Female Body Inspector” T-shirt. There’s the guy who fills the underground tanks with gas, and the guy who pumps that gas into your car. Don’t forget the crane operator who lifts the number changer high up to the glowing Hess sign to swap out the number 7 next to “Premium” for a number 8 so that when you drive up, you can decide whether you want to spend $3.08 for a gallon of top-notch petroleum.
Every person has his or her job to do in order to create the final product: a functioning—and, if Hess is lucky, a prosperous—gas station. The fuel-pumping guy can’t drop his hose and start delivering fuel, just as the number changer can’t operate the crane without risking tearing a giant hole in the roof of the quickie mart, where the cashier sits, printing out lotto tickets and offering customers directions to the nearest IHOP.
This is what’s called “division of labor,” and it’s what makes economies function.
Take a look around you. Every piece of furniture in your house, the boneless chicken breasts you eat for dinner, the car you drive, and the clothes on your back—they all owe their existence to a division of labor. Even the book you have in your hands right now came into being thanks to loggers, ink makers, printing press operators, glue producers, art directors, nagging editors, gifted writers, guys in suits who sign checks, and a group of deep-pocketed German publishers who pay the salaries of the suit-wearing check signers. There’s no way those gifted writers could fell a tree or pay anyone’s salary, much less their own. And maybe the ink makers could one day learn the art of glue producing, but it wouldn’t happen overnight, and the glue quality would probably never be the same, and . . . well, you get the idea.
That businesses thrive when employees have specialized tasks is hardly a novel idea. It probably dates back to the cavemen, when certain hunters were prized for their good aim and others were aces at skinning and filleting bison. But in more recent times, the concept is often credited to Adam Smith, the father of modern economics.
In 1776, Smith published his now seminal work, An Inquiry into the Nature and Causes of the Wealth of Nations. Among the many insights that to this day form the basis of economic theory, Smith argued that the secret to a nation’s wealth wasn’t money, but labor, and specifically, a division of labor based on specialization.
To prove his point, he used the example of a pin factory, saying that many more pins could be made in a day if each of eighteen specialized pin-making tasks was assigned to specific workers, rather than each worker making an entire pin from start to finish. Ten workers, he said, could produce forty-eight thousand pins a day if they specialized, versus perhaps just ten pins without specialization: “One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head.” And so on.
Seems evident now, at a time when many of us take specialization for granted, when we buy iPods in Kansas that were assembled in China with parts made in Japan and the Philippines, when we work in offices where some people are in charge of hanging art on the walls and others unclog toilets. But until Adam Smith put quill to parchment, no one had quite articulated the benefits of dividing labor into its component parts or made such a compelling argument for running the world this way.
The Principle, Part Two
Now back to the question of who should do what. Division of labor is only part of the answer. It tells us that no one person should do everything and that each person should have a specialty. But it doesn’t say anything about how we go about deciding who’s best suited to hanging art or pumping gas, or which country should make the iPod’s display screen and which the hard drive. For some ideas on that front, we turn to British economist David Ricardo, who, four decades after Smith’s Wealth of Nations, came up with a theory called “comparative advantage.”
The theory of comparative advantage says that it’s not efficient for you to take on every single task you’re good at, only on those tasks you’re relatively better at compared with other tasks. (See: Michael Jordan’s short-lived baseball career.) Or, as economists would put it, what matters is not your absolute ability to produce goods, but your ability to produce one good relative to another. Those are the things in which you have the comparative advantage.
Comparative advantage is the foundation of free trade. The idea is that instead of each country making everything it needs for its people, it should specialize in what it produces relatively better and then trade these goods and services with other countries. Countries develop specializations for any number of reasons. They might have control over scarce resources, like Saudi Arabia with oil. They might have millions of people willing to make flat-screen TVs for a pittance, as China does. They might have unique weather patterns, as Spain does, with its windy plains and burgeoning wind-turbine industry. Or they might be in the middle of nowhere: New Zealand, for example, saw a spike in tourism after the September 11 attacks, when travelers were looking for destinations terrorists would never think to go.
For David Ricardo, sitting in his Gloucestershire estate and ruminating on the notion of comparative advantage back in 1817, wind turbines and flat-screen TVs were the stuff of science fiction. Ricardo’s theory was founded on the much more rustic example of England and Portugal trading wine and cloth. Ricardo said that even if Portugal could make both wine and cloth more quickly than England could, it was still in Portugal’s interest to specialize in the one good it was relatively better at and trade with England for the other.
Pay attention, because we’re going to tell you exactly how and why it pays to trade. First, take a look at the (hypothetical) amount of time it takes England and Portugal to produce one unit each of wine and knickers (cloth) when they do it all themselves and don’t trade.
Product Portugal England
1 pair of knickers 20 minutes 30 minutes
1 bottle of wine 10 minutes 60 minutes
Total time 30 minutes 90 minutes
Given how much faster Portugal is at making wine and knickers, you’d think Portugal should make everything itself, right? Wrong.
Going it alone, Portugal spends half an hour making a bottle of wine and a pair of knickers and England spends ninety minutes doing the same.
Let’s say they decide to trade. Portugal makes two bottles of wine, since it’s relatively faster at wine than at knicker making, what with all the grapes growing everywhere. England makes two pairs of knickers, since it clearly has more sheep than vineyards. Then they trade—one pair of knickers for one bottle of wine . . . and suddenly Portugal’s got one of each for only twenty minutes of work. England had to put in only sixty minutes of work instead of ninety.
Product Portugal England
2 pairs of knickers n/a 60 minutes
2 bottles of wine 20 minutes n/a
Total time after trade 20 minutes 60 minutes
It’s like magic. Only it’s not magic. It’s math. Very, very simple math, we concede—math that doesn’t take into account all the other things the two countries make or the prices they could charge for their goods on the open market. It’s also true that England’s workers still wind up working longer hours compared with Portugal’s workers for the same rewards, but it’s undeniable that they’ve saved time relative to their pretrading workloads.
Ricardo’s model illustrates a universal truth: There are great rewards to be had from trading smartly and great wastes of time and energy from trying to do everything yourself, or even from splitting things in half.
Which is what takes us to the topic you’ve probably been waiting for: your marriage. Think of your marriage as a business comprising two partners. You’re not only business partners in the sense that you work together for the good of your company, you’re also trading partners who exchange services, often in the form of household chores. How should you decide who does what? Who should specialize in shopping for orange juice and who in cleaning windows? Who should provide clothes that are freshly laundered and folded, and who should put food on the table at dinnertime? We all wish these kinds of questions had easy answers, yet household labor issues are often the most divisive that couples face. They don’t have to be. Economics offers clear solutions. You’re about to meet three couples, each of whom were nearly undone by all sorts of seemingly inane duties that they were dividing in all the wrong ways.
One couple, thinking that a fifty/fifty split was the way to go, made the mistake of having no specializations at all. Another couple miscalculated what their comparative advantages were, and a third couple discovered that specializations aren’t static and can sometimes change as the marriage itself changes.
Case Study #1
The Players: Eric and Nancy
Eric and Nancy had never heard of David Ricardo when they fell in love and decided to merge as lifelong trading partners. They weren’t familiar with the theory of comparative advantage, and if it came up at a dinner party—which, frankly, it never did—their eyes would very likely have glazed over. Eric was a photographer for glossy cooking magazines, and Nancy designed a line of teen clothing for one of those apparel chains that have an outpost at every mall in America. They were more artsy than economicsy.
Yet economics—bad economics—dominated their lives. Without knowing it, they’d become a case study in how a bad division of labor can harm an otherwise well-matched couple. That’s because Eric and Nancy split the work not on the basis of who did which job best, but on what seemed fair. And fair, in their view, was a strict fifty/fifty split.
They divided everything in half. They had a joint checking account into which their roughly equivalent salaries were deposited directly and from which they transferred the same allowances every month into their individual checking accounts to spend as they pleased. They had a mutt named Moo Shoo whom they took turns walking every other morning. When Eric cooked, Nancy cleaned. When Nancy cooked, Eric cleaned. They rotated laundry, bill paying, in-law calling, trash days. Eric was in charge of cleaning the upstairs bathroom. Nancy handled the downstairs.
On the outside, Eric and Nancy’s system made them seem like the perfect modern couple. Their friends marveled at how they defied stereotypes: Eric knows how to use a Swiffer! Nancy gives him so much space! He’s so accommodating! She goes to Home Depot without him!
There was only one kink: Eric and Nancy weren’t happy.
The Problem: The Fifty/Fifty Marriage
Here’s a puzzler: Think of a successful business whose employees work the exact same hours and do the exact same amount of work for the exact same pay.
That’s because, outside of assembly lines, there aren’t many.
From your grocery store to your money manager’s office to the website you get your news from, businesses are organized around specialization. Employees have distinct tasks that require different sorts of expertise and command higher or lower salaries. Bond traders know the bond market inside and out, stock traders are more proficient in stocks. There are people who sell the ads that appear on The Wall Street Journal’s website and people who write the stories, and neither group knows very much about what the other does all day.
Imagine what would happen if those ad guys started spending half their time writing articles and reporters spent half their time selling ads—all in the name of fairness. It would be a disaster.
The specialization model also applies to the broader economy. Some countries grow bananas, some produce cars, some make tank tops.
The same logic applies to marriage. In insisting on a “fair” division of labor, Eric and Nancy had created a monster. For all their focus on fifty/fifty, some days things could feel a little too egalitarian.
Like when the laundry hamper would overflow with dirty clothes and an exhausted Nancy would say to Eric, who was busy shopping for old camera equipment online, “I did the laundry last time—it’s your turn.”
Or when Eric, chopping onions for a lamb tagine, saw Nancy watching Law & Order and thought, “Wait a minute, why am I spending all this time on a fancy meal when all she ever makes is mac and cheese?”
Or the time Nancy’s parents were coming for dinner and she and Eric spent the day arguing over whether Eric cleaning his office really counted as “housework” as much as Nancy mopping all the floors—since, said Nancy, his office wasn’t a “communal living area.”
This was life at Eric and Nancy’s house. Each one constantly monitoring the other’s workload, keeping mental bar graphs of who had done more and who had fallen behind, sounding the unfairness alarm whenever it seemed the split was starting to shift into the—gasp!—sixty/forty range. “Everything was a debate,” said Nancy. “We spent so much time fighting over who was doing more and who needed to pick up the slack, it’s amazing we got anything done at
“It got to the point where if I was dusting and Nancy was painting her nails, I’d drop the duster and check my email just so I didn’t end up doing more than her,” said Eric.
They posted two chore logs outside the kitchen and checked them frequently to ensure no one was cutting corners.
As you can see in the “basic chore log” below created by Nancy, even opening the mail counted as a chore. In fact, once Nancy realized how much time she was spending on the mail, she decided it was only fair to hand off making the bed to Eric.
Not to be outdone, Eric created an “advanced chore log” that included onetime jobs. These tended to be more time-consuming and intensive. Eric thought he was being especially clever when he delineated his tasks into “easy,” “harder,” and “pain in the butt,” lest Nancy think that he was getting away with all the simple stuff.
Reading Group Guide
A letter from co-author Jenny Anderson:
When I told my husband I was thinking about writing a book about marriage, specifically a book that used economic principles to resolve common conflicts, he reacted as if I’d asked suggested we take up sea kayaking. “Sounds cool,” he said.
At the time, I was eight months pregnant with our first kid and working as a business reporter at the New York Times. It was 2008 and the financial world was falling apart. I was working 12 hour days, and we were all hoping I wouldn’t go into labor in the newsroom. But somehow in spite of this, I was convinced that writing a book was not just a good idea, but a fantastic family undertaking. I’d learn more about successful marriages! I’d become an amateur economist! I’d come up with all sorts of cool tricks to getting what I wanted. What genius!
Talk about overconfidence. In Spousonomics: Using Economics to Master Love, Marriage, and Dirty Dishes Paula Szuchman, my co-author, and I write that overconfidence contributes not just to booms and busts in the wider economy, but booms and busts in marriage, too. Overconfidence is what causes CEOs of major corporations—think Merrill Lynch and Lehman Brothers—to blow up their firms: They didn’t plan for the worst because they thought they were too smart to drive their banks into the ground. Similarly, overconfidence drives couples to assume they will be together forever and then fail to take into account how much strain certain events—say, a baby, a full-time job and a book—might put on their relationship.
Chalk that one up to inexperience. I hadn’t yet started my research into the world of marriage and economics. But the more Paula and I researched the latest thinking in economics, while simultaneously interviewing hundreds of couples across the country about their own marriages, the more we realized just how much economics has to teach us about making marriage work. We were learning how to divide labor more efficiently, how sex comes down to a simple question of supply and demand, and how a smart incentive can get your spouse to do almost anything you want (almost).
We even hit on some anger-management techniques. When Paula and her husband would discuss something—say, why he’s incapable of signaling before making a left turn—Paula sometimes felt inclined to argue all night if he didn’t immediately concede that she was right about all his flaws. That’s because she was taught never to go to bed angry. So she’d amp it up until her husband would fall asleep, and she was apoplectic. “Woman, we need our sleep,” he’d say, rolling over and leaving her in a smoldering heap of fury.
At first she thought this “going to sleep” was heresy. But then she wrote a chapter about a concept in behavioral economics called “loss aversion,” meaning our strong dislike of losing. She learned we hate losing so much that we have to win $200 to make up for the pain of losing $100. Traders who are losing bet the house, for example (there’s a reason pawn shops are conveniently located next to casinos). Similarly, when Paula was losing in an argument with her husband, she dug in her heels and kept trying to win at all costs. She’s not alone: In our research, we found that two-thirds of married couples keep fighting even when they know it’s “a losing battle.”
Paula learned that a better approach was actually sleeping on it. After all, was she fighting about the turn signals or was it her loss aversion kicking in? So she’d go to bed angry and see how she felt in the morning. If she still cared, she could have a rational conversation about it. If she didn’t—and often she didn’t—well then, both she and her husband got some much-needed sleep. Another bonus: She could cut back on the tally of regrettable-things-said in the wee hours of the morning when winning is really the only objective. I recall my husband’s original enthusiasm about the book with a twinge of nostalgia. We didn’t know our marriage would be put through the wringer, or that I’d have two kids during the writing of the book (Paula had one, too, bringing the offspring total to three). But in the end, my overconfidence was not totally misplaced. I did learn a lot of new tricks. I have a better toolkit. And so does my husband.