The Market System: How We Spend Our Time

by Elaine Schwartz    •    Jun 22, 2013    •    2227 Views

During a typical day, we spend our time working, relaxing, sleeping, caring for others, caring for ourselves, doing housework and attending to an assortment of minor and major miscellany. Last Thursday, in its annual American Time Use Survey, the BLS (Bureau of Labor Statistics) told us what we do and when.

Broadly and specifically, the BLS provided a wealth of information about our daily lives. They presented time use averages that included everyone but also looked at the daily habits of different age groups. They conveyed the continuing divide between gender responsibilities and focused on people in and out of the labor force.

For example…

Human Capital...Time Use BLS 2012

While the Time Use survey conveys some pretty interesting facts, it also adds insight about our market economy. Inserting the BLS Time Use data in a circular flow model, you can see the prevalence of the market system in our lives.

These circular flow models, below, show how approximately 120 million households interact with 20 million (or so) business firms. The upper inner loop represents goods and services and the lower inner loop, land, labor and capital. Correspondingly, the upper outer loop shows the flow of dollars that pays for goods and services and the lower one, payments for land, labor and capital.

Circular Flow Product Markets

A circular flow model of the market system.

Our 1.1 hours for eating can be a part of the upper loop where households buy goods and services. When we buy a pizza, we send money to businesses around the upper loop. In return, also in that upper loop, we get the pizza. Similarly, we could say that our cable TV bill and our Yankees tickets are all leisure related upper loop consumer purchases that occupy 2.5 hours of each day.

In the circular flow model’s lower loop, US households send their supply of land, labor and capital to businesses. For labor, we can go to the Time Use Survey and look at the average 8.8 daily hours used for work related activity.

Circular Flow Factor Markets

Finally, we have activities that are separate from the circular flow of a market system. When I care for my children, mow my lawn, run 4 miles and attend religious services, no market transaction occurs.

Sources and resources: The charts and tables in the American Time Use survey are a fascinating snapshot of our economy. You might also want to check out the same data for the OECD (Organization for Economic Cooperation and Development) to see how countries like Norway and France and South Korea compare. Finally, though gated, the Wall Street Journal has a perfect infographic representation of the Time Use Survey’s results.

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