Consider a model in which individuals have a fixed amount of time to allocate between three activities: paid work, household production, and gaming. Each one of these activities requires an investment of effort and human capital, and each provides rewards, either monetary or non-monetary.
The rewards from each activity (Zi) are proportional to the individual's innate ability (bi), the time spent in that activity (twi) and an individual's human capital investment (hi):
To simplify further, assume that human capital is produced only with investments of time:
This model updates that of Gary Becker (1985), who used it to argue that innate differences in productivity combined with gains to specialization generate a gendered division of labour.
Becker's focus was on activities that (a) require investments of human capital (b) produce tradeable outputs. For example, food preparation requires skill, and time spent in food preparation produces hot dinners which can be traded for goods produced by other household members. Assume that individuals need both hot dinners and other goods, i.e. utility is given as:
where Zi is the output of the ith activity.
Given this utility function and the above production technology, Becker (1985) shows that optimality is achieved when individuals specialize in the activities where they are most productive. This allows people to take advantage of their innate abilities and economizes on human capital investments (each person has to learn fewer skills). Individuals then trade with others, maximizing output and well-being. People form families and households to facilitate this trade.
Becker (1985) mentions leisure only once in passing, and leisure does not fit well into his model, as it often requires little human capital investment and is not tradeable. Becker's neglect of leisure might have made sense in 1985, when a plumber called Mario was someone who came to your house and repaired a blocked drain, but not in 2011.
Videogames have transformed leisure. Now I'm not talking here about Guitar Hero or Minesweeper or on-line scrabble. While a Spider Solitaire addiction might be obnoxious, it is qualitatively similar to an addiction to crossword puzzles or romance novels -- it may have a somewhat negative impact on productivity and personal relationships, but it is rarely life changing.
I'm talking here about a special subcategory of videogames: World of Warcraft, Everquest, Halo. These games have three crucial features.
First, they require large human capital investments. For example, in MMORPG (massively multiplayer on-line role-playing games) like World of Warcraft, the player spends countless hours creating a character with special talents, skills, money, and other resources. Other games require the player to learn to navigate around huge imaginary hazard-filled worldds.
Second, they provide outputs that are close substitutes for real-world goods and services. Indeed, there are valuable commodities that individuals in post-industrial economies can achieve more easily through gaming than market or household production. As noted gaming expert David Wong writes, satisfying work requires autonomy, complexity, and connection between effort and reward, noting:
Most people, particularly in the young gamer demographics, don't have this in their jobs or in any aspect of their everyday lives. But the most addictive video games are specifically geared to give us all three... or at least the illusion of all three.
Gaming can also provide an adrenalin rush. And as for particularly valuable forms of household production, how about God of War - "This "Rated 'M' for 'Mature'" title features a minigame where you, the God of War, come across Aphrodite, the Greek goddess of love" - for a graphic description of what happens next, click here.
Third, videogames produce outputs that are real but non-tradeable. On the reality of video game outputs, I again quote David Wong:
Your brain treats items and goods in the video game world as if they are real. Because they are.
People scoff at this idea all the time ("You spent all that time working for a sword that doesn't even exist?") and those people are stupid. If it takes time, effort and skill to obtain an item, that item has value, whether it's made of diamonds, binary code or beef jerky.
Yet even though the World of Warcraft sword is as real a good as a $600 copy of Stata, it is not tradeable outside of the WoW universe. So while videogames allow specialization and production, they do not allow trade, hence discourage the formation of households.
In 1985, working hard and getting a job was a reasonable path to towards social status, fun, adventure, and a beautiful/handsome lover. Now videogames offer an alternative - and frequently more attractive - path.
The point here is different. Becker (1985) argues that "the gain from marriage is reduced, and hence the attractiveness of divorce raised, by higher earnings and labor force participation of married women."
I suggest that in the quarter century since Becker wrote, videogaming has done more than increased female labour force participation to undermine the basic specialization and exchange that provide one of the fundamental economic rationales for the existence of households.