The Demand for Leisure A view of the 20 th century
What is leisure? Entertainment Recreation free time Is there a consistent definition? Is yard work a leisure activity? Can free time be stressful?
The labor-leisure tradeoff 24 hours per day labor leisure Quantity: Leisure = 24 - labor Quality: Leisure = (Y, labor) Y = wage x labor
The various uses of time 24 hours per day labor Free time Chores Necessities entertainment recreation leisure sleeping eating cooking yardwork housework
When wages go up and hours go down more leisure is available 24 hours per day labor Free time Chores Necessities leisure
What do we do with leisure time? One choice is entertainment
The market for entertainment in the 20 th century... Per capita entertainment spending $2,500 $2,000 nominal dollars $1,500 $1,000 $500 $- 1900 1920 1940 1960 1980 2000 2020 7
... And beyond Real personal consumption expenditures: admissions to live entertainment (excluding sports) $30.00 $25.00 billions of real dollars $20.00 $15.00 $10.00 $5.00 $- 1998 2000 2002 2004 2006 2008 2010 2012 2014 Axis Title 8
What caused this increase? Simple supply and demand explanation Increases in demand Increases in quantity demanded Price decrease due to increase in supply 9
The changing entertainment market Price/unit of entertainment D1 D2 S1 S2 Qty of entertainment 10
An example of increased supply number of professional sports franchises 450 400 350 300 250 200 150 100 50 0 1880 1900 1920 1940 1960 1980 2000 11
80000 70000 60000 50000 40000 The Demand for Major League Sports Average Game Attendance in Four Major Team Sports MLB NHL NFL NBA 30000 20000 10000 0 1900 1920 1940 1960 1980 2000 12
What determines the demand for entertainment? Income Number of consumers Price of related goods leisure time transportation preferences expectations
How have things changed over time?
real disposable personal income (bil) $8,000.00 $7,000.00 $6,000.00 $5,000.00 $4,000.00 $3,000.00 $2,000.00 $1,000.00 $- 1880 1900 1920 1940 1960 1980 2000 2020
U.S. Population 1890-2000 (000s) 300,000 250,000 200,000 150,000 100,000 50,000 0 1880 1900 1920 1940 1960 1980 2000 2020
Percent U.S. population urban 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1880 1900 1920 1940 1960 1980 2000 2020
Leisure time Length of work week Technology Productivity Household chores Real wage
The growth of leisure time $60,000 70 $50,000 60 real wage $40,000 $30,000 $20,000 Avg real wage 50 40 30 20 weekly hours worked $10,000 Avg weekly hours worked 10 $0 0 1880 1900 1920 1940 1960 1980 2000 2020
The labor supply curve Real wage Income effect dominates Substitution effect dominates 0 Hours of labor 24 24 Hours of leisure 0
Changing preferences and expectations How have preferences for leisure changed? What determines those preferences? Society Household makeup Expectations about what I deserve
Changing pattern of expenditures Personal consumer spending 1910 food clothing housing medical traspo recreation
Changing pattern of expenditures Personal consumer spending 1940 food clothing housing medical traspo recreation
Changing pattern of expenditures Personal consumer spending 1970 food clothing housing medical traspo recreation
Changing pattern of expenditures Personal consumer spending 2000 food clothing housing medical traspo recreation
Changing pattern of expenditures personal consumer spending 2010 food clothing housing medical transpo recreation
How important is the entertainment industry? Small compared to the total economy Disproportionate media coverage Total spending on the arts, entertainment and recreation less than 10% of total personal consumption spending Approximately 6% of total GDP Spectator sports spending: 0.1% of GDP 27
U.S. Employment in Selected Occupations Category 000s of employees Theater 63.4 Athletes, coaches, etc. 215 Musicians, singers, etc. 179 Registered nurses 2449 Chefs and head cooks 281 Hairdressers 718 K-8 teachers 2557
The market for actors # employed workers (000s) Avg annual salary Bot 10% Top 10% Actor 44.9 $47,820 $15,420 $116,540 Teacher 555.5 $37,840 $16,900 $67,690 All jobs 107,339 $34,750
Summary Leisure time has increased as work week decreased Demand for leisure increased as income, urban population increased Supply of leisure activities has increased Technology has impacted both supply and demand of leisure
Friday Discussion (Feb 6) Last year 750,000 people attended 99 performances of the NY Metropolitan Opera About one million more watched broadcasts of Met performances
Friday Discussion (Feb 6) More than 70,000 tickets have been sold for Super Bowl XLIX this Sunday The starting ticket prices are $800 The television audience for Super Bowl XLVIII was 111 million, and is expected to increase this year
Friday Discussion (Feb 6) Why is football more popular than the opera? Max one page Typed, double spaced or neatly hand written Prepare to discuss on Friday