The Cost Of Gender Inequality: Why The World Needs More Women Economists
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
Adam Smith once posed the fundamental question of economics as ‘How do we get our dinner?’. Smith suggested that it is self interest that coordinates the complicated processes that bring food to our table, and only to the selfish wisdom of the invisible hand can the function of economic markets be attributed.
However, the curious question arises ‘Who Cooked Adam Smith’s Dinner?’. In her acclaimed book by the same title, economist Katrine Marçal points out that Smith never left his childhood home and relied on his mother to prepare and put the food on the table. Yet Smith does not regard his mother in his understanding of economic processes, much less women, leaving the household work of women entirely unvalued in his conception of economic markets.
In fact, if you read Smith’s most famous work The Wealth of Nations, you may be surprised at his treatment of women as much more like assets than economic actors. It comes at no shock then that Smith’s economic man, “homo economicus,” is constructed of largely masculine tendencies and characteristics. The classical theory was not created with women in mind; it was instead constructed in a patriarchal world where women were considered without agency.
This thinking permeated for quite some time, and it was not until the latter half of the last century that women gained the right to pursue their own self-interest and entered the workforce. Capitalism has only recently become gender neutral.
“A closer look, however, suggests that greed and lust are generally considered good only for men, and then only outside the realm of family life. The history of Western economic ideas shows that men have given themselves more cultural permission than women for the pursuit of both economic and sexual self-interest. Feminists have long contested the boundaries of this permission, demanding more than mere freedom to act more like men.”
-Nancy Folbre, Greed, Lust, and Gender: A History of Economic Ideas
Even then, Smith’s theory of markets is deficient in its limited valuation of self-interested transactions, leaving out economic activity done for other motives, particularly intrinsically motivated care work done in service of the household, children, and elderly. This work is unique in its nature which diminishes the bargaining power of those who provide it and keeps them from withdrawing it at will. But the economic value is clear — if that work were to be taken away, a secondary economic agent would have to be paid to do that same labor.
It is a simple fact that the market would not function without the unpaid labor of women. Some estimates suggest that unpaid labor is worth $10.9 trillion globally, and most of this burden — approximately 76.2 percent globally — is taken on by women. The belief that women and men are slowly equalizing in economic status and gender roles is challenged by statistics that demonstrate how little change has occurred in caretaking in the United States.
“Both sexes care for their home, children, and elders, but women dedicate 3.1 hours each day, 74 minutes more than men, to these unpaid labors of love. And despite the perception that 21st-century men are more egalitarian, the domestic-duty divide has closed by only 11 minutes since 2003, the first year of the survey. Also no surprise: Both sexes work for pay, but men clock an average of 4.16 hours, 68 minutes more than women, on the job each day, translating into higher income and more benefits.”
-Anastacia Marx de Salcedo, The Atlantic
The economic effects of unpaid work mean women often take on part-time jobs, low-paying jobs, and episodic employment, all of which have staggering economic repercussions.
While 44 percent of men have employer-sponsored private health insurance, only 35 percent of women do. A full 24 percent get insurance through their spouse’s job.
The average monthly Social Security payment for either retired or disabled women is about $300 less than the $1,565 or $1,320 that men get.
Women have an average of $115,000 in retirement savings compared with $203,000 for men, according to Prudential Financial’s 2018 Financial Wellness Census. Nearly half don’t have any retirement savings at all. (The Atlantic)
Apart from the wellbeing of women being deeply impacted by unpaid work, households are affected as well. Current concerns about inequality are amplified when one takes into account research that shows when unpaid work is quantified, inequality heightens as women transition into the labor market. Women joining the labor market with variable wages while still paying for the lingering costs of care work results in a disequalizing effect.
It is necessary that we quantify and account for unpaid labor in our data but also in our measures of wellbeing. One shocking comparison emphasizes that two families earning the same income of $50,000 are considered the same by current measures of standard of living. However, there is a clear difference between a family where both partners go to work for $25,000 and another family where one partner earns $50,000 while the other is at home full time. Thus goes the economic quip that if a man marries his housekeeper, GDP falls.
We must reevaluate the theory that establishes which work is valued and rewarded, and the measures used for wellbeing so that our policies fall in suit. Feminist economists propose that doing so strengthens the case for better protections for part-time workers, paid family leave, and better government support for education and healthcare, among other essential needs.
The same goes for our response to recessions and unemployment. We need stimulus that supports not only physical infrastructure but the social infrastructure that keeps our economy and society afloat. Women often get little aid from the government when caring for their families in difficult times while stimulus money flows to transport services and other forms of state infrastructure. At the same time, fiscal stimulus often leads to fiscal austerity where public services are cut, with the burden falling mostly on women.
As we are now seeing with the COVID-19 pandemic and the resulting economic fallout, women are already feeling the effects hit them hardest. Majority female part-time workers are getting laid off first and other women are given no choice but to compromise on their careers to take care of the household, which can include at-risk elderly and children now out of school.
“This could be the first outbreak where gender and sex differences are recorded, and taken into account by researchers and policy makers. For too long, politicians have assumed that child care and elderly care can be “soaked up” by private citizens—mostly women—effectively providing a huge subsidy to the paid economy. This pandemic should remind us of the true scale of that distortion.”
-Helen Lewis, The Atlantic
These developments beg the question of how we should respond. We can advocate for fair policies and progress on the front of unpaid labor, but the problem is rooted in the predominance of males in the field of economics since the beginning of modern economic thought with Adam Smith. While STEM fields are moving towards gender equality, economics still lags far behind with only a third of undergraduate economics students being women. Since economics is a key field that influences the rules of our dominant systems as a society, it is imperative that women are represented yet the field stalls in inaction.
“Economists are influential in public policymaking, from setting monetary policy to designing systems to allocate donor organs. Here, ‘the under-representation of women matters because it affects what questions economists look at’, says Sarah Smith, a professor of economics at Bristol university and chair of the RES’s women’s committee. ‘Ultimately it affects the advice given on public policy issues.’”
-Gemma Tetlow, The Financial Times
It is time women shake up the field of economics. That is not to stay there are not prominent female economists making great headway. We are already seeing women rise to prominent positions in the field: IMF Chief Economist Gita Gopinath, World Bank Chief Executive Officer Kristalina Georgieva, and OECD Chief Economist Laurence Boone, among others. However, only two women to date have won the Nobel Prize in Economics and the statistics on incoming students in the field show a clear gender disparity.
Until women achieve equality in the field, progress will be slow to follow though the benefits are manifold. Studies have statistically proven that female economists in the field are significantly less biased and more open to non-mainstream thinking. More women in the field may be key to moving forward and advancing the study and practice of economics, to finding an inclusive economic solution for all.
Written By Katia Arami, Undergraduate Economics and International Development Student
Greed, Lust and Gender: A History of Economic Ideas by Nancy Folbre
https://www.theatlantic.com/ideas/archive/2019/06/time-use-survey-has-feminist-origins/592570/
https://www.ft.com/content/4a04096e-5ef9-11ea-ac5e-df00963c20e6
Who Cooked Adam Smith’s Dinner? A Story About Women and Economics by Katrine Marçal
https://www.youtube.com/watch?v=vZEJV3kBQH0
https://www.ft.com/content/5b9b47d2-2e12-11e9-80d2-7b637a9e1ba1
https://www.ft.com/content/d47e885a-539b-11e8-84f4-43d65af59d43