The Demand for Leisure

A view of the 20th 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 leisure

Fre

e tim

eC

hore

sN

ecessitie

s

entertainment

recreation

cooking

sleeping

housework

yardwork

eating

When wages go up and hours go

down more leisure is available24 hours per day

labor leisureF

ree tim

eC

hore

sN

ecessitie

s

What do we do with leisure time?

• One choice is entertainment

The market for entertainment

in the 20th century . . .

Per capita entertainment spending

$-

$500

$1,000

$1,500

$2,000

$2,500

1900 1920 1940 1960 1980 2000 2020

no

min

al

do

llars

7

. . . And beyond

8

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

1998 2000 2002 2004 2006 2008 2010 2012 2014

bill

ions o

f re

al dolla

rs

Axis Title

Real personal consumption expenditures: admissions to live entertainment (excluding sports)

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

10

D1

D2

S2

S1

Qty of entertainment

Price/u

nit o

f ente

rtain

ment

An example of increased supplynumber of professional sports franchises

11

0

50

100

150

200

250

300

350

400

450

1880 1900 1920 1940 1960 1980 2000

12

0

10000

20000

30000

40000

50000

60000

70000

80000

1900 1920 1940 1960 1980 2000

Average Game Attendance in Four Major Team Sports

MLB NHL

NFL NBA

The Demand for Major League Sports

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)

$-

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

$8,000.00

1880 1900 1920 1940 1960 1980 2000 2020

U.S. Population 1890-2000 (000s)

0

50,000

100,000

150,000

200,000

250,000

300,000

1880 1900 1920 1940 1960 1980 2000 2020

Percent U.S. population urban

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

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

0

10

20

30

40

50

60

70

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

1880 1900 1920 1940 1960 1980 2000 2020

weekly

ho

urs

wo

rked

real

wag

e

Avg real wage

Avg weekly hours worked

Changing preferences and

expectations

• How have preferences for leisure

changed?

• What determines those preferences?

– Society

– Household makeup

– Expectations about what I deserve

– Technology

How does technology affect

preferences?

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

personal consumer spending 2010

food

clothing

housing

medical

transpo

recreation

Changing pattern of expenditures

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 $9500 $113,799

And the top .0002%?

• They earned an average of $75 million

each in 2018

• The top paid actor hauled in $239 million

And he didn’t even

make a movie in

2018 . . .

. . . His earnings

came from the sale

of his share of his

tequila company

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

Questions?

Dwayne “The

Rock” Johnson

was the second

highest paid actor

in the world in

2018He earned

$124 million -

almost all from

acting