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Coordinated leisure and energy policy

October 26, 201612:00 pm1:30 pm

Standard models of labor supply do not account account for the fact that leisure consumed simultaneously across millions of people may be different than its isolated consumption by individuals. We enrich the standard model to account for such “coordinated leisure” and demonstrate a role for the government in selecting from multiple potential coordinated equilibria. Optimal selection of this equilibrium must account for differences in the externalities produced by coordinated leisure relative to labor. Examining grid-scale electricity demand, automobile flow in California, and national passenger-miles-flown, we demonstrate that coordinated leisure, in the form of weekends and holidays, is substantially less energy intensive than uncoordinated periods. We use hour-level analysis of national time-use surveys to demonstrate that these coordinated leisure policies reduce energy demand by triggering substitution away from labor and towards leisure activities, particularly sleep. Because a large fraction of the national population consumes all coordinated leisure up to the federally-prescribed constraint, our results suggest that national welfare can be strictly increased by relaxing that constraint and selecting a new equilibrium where energy demand is lower and coordinated leisure is higher. We compute national energy savings from a variety of coordinated leisure policies. Overall, our results suggest that to fight climate change, society should have more fun.