Why Germans should stop mowing their own lawn

Mowing the lawn appears to be a common pastime for Germans. Washing the car or ironing even makes it into a listing of ways to burn calories in a recent issue of the news magazine Focus. Does this make sense, economically?

Home production, i.e. productive non-market activities, are not captured in the national accounts. Time use surveys, such as the one carried out in Germany in 2001/02, show that adult Germans spend 25 hours per week on "unpaid" work, more than paid work on average.

Macroeconomic indicators may be reminiscent of the extent of home production in Germany. Labor participation, particularly among women, is low, possibly on the account of home keepers and stay-home mothers. Work hours have traditionally been lower, providing at least more opportunity to engage in home production also for those in jobs. These indicators distinguish Germany in particular from the US, where consumers are perceived to rather pay than doing stuff themselves. (For disclosure, Cliff uses dry cleaners, car washing, but doesn't have a lawn to mow.)

Home production may be a popular or cultural preference, economically sensible it is not. If home production would be outsourced and thus count as market activity, per capita GDP in Germany could be about 40 percent higher, possibly closing the gap to the US. Buying services instead of doing it yourself bears economic benefits: Mothers with higher education are more productive in paid work of their profession. Other home activities requiring low skills, such as mowing the lawn, could provide work for the less qualified. Economies of scale allow dry cleaners to be more efficient than ironing shirts at home can ever be.

Also from a policy perspective, home production is a blight. By remaining outside the "paid for" economy, home production escapes taxation. With the extent of public services and social safety net the same, higher home production means paid-for economic activities have to be taxed higher. This results in a coarse and inefficient redistributive effect and fosters black market activities, to the detriment of those seeking work in the formal economy. Also, home production largely escapes the scope of regulation, such as professional standards in home improvement. In contrast, regulations for paid-for services (such as by German's craft professions) often are excessive and deprive customers of the choice of less-quality but more affordable services. (Yet, environmental laws have put an end to Cliff's most favorite Saturday activity: washing his car on public streets.)

Overall, the mindset with regard to home production has to change. Many paid-for services that substitute home production are taxed and regulated in ways that make them unattractive alternatives. Instead, it is home production which should be viewed as an unregulated, subsidized, and usually inefficient form of economic activity, and the bar for paid-for services that replace them should be set accordingly.