Download The Effects of Gender Bias on Neoclassical

The Effects of Gender Bias on Neoclassical Economic Theory and Analysis
ABSTRACT
This paper examines the patriarchal roots of Neoclassical thought and considers the role of
unpaid labor in the economy. Evaluating the effects of androcentric bias in economic theory and
evaluation, this paper critiques the economic notion that each individual holds masculine traits.
The findings suggest that economists generate fallible analyses by overlooking productive
unpaid labor, which is typically done by women, and non-market variables, such as MicroEnterprises and household production. By considering non-market variables and expanding the
traits of an actor to include that of Homo Reciprocans, economists can produce analyses that are
more accurate; a shift from an atomist view of society to that of a holistic one.
INTRODUCTION
Neoclassical economics is defined by its reliance on rational choice theory (Liberating
Economics, 2004, p. 5), and was largely established by homogeneous, typically white, male
economists who were greatly influenced by Victorian ideology. The biased and discriminatory
roots of neoclassical economics have led to inefficient and fallible analyses that overlook both
the intersectionality of economic actors and the non-market variables that influence the
economy; furthermore, these biased roots create a disproportionate burden of labor for women
and adds to the barriers women must overcome to escape this burden. Contemporary application
of Neoclassical theory and analysis, then, leads to inequitable, incomplete and counterproductive
policy making.
Neoclassical economists have been almost exclusively white males. This physical
embodiment of homogeneity extended to their Victorian ideology in which women were defined
solely by their domestic capacities and ability to bear children; however, this domestic role,
which included social reproduction, was, and still is, considered to be unproductive and is
categorized as leisure time. Social reproduction entails the time and effort required to reproduce
human beings, and the future labor force, and to maintain the well-being of people in families
and communities; it is female-intensive labor (Evers, 2003, p. 13). Leisure time includes time
and production not exchanged for wages through the market. Women’s productive but unpaid
work, then, is labeled as leisure time, rendering this work invisible and unproductive, as it exists
outside the sphere of the market (If Women Counted, 1988). This view, based on the
heteronormative family wage system, or ideology of domesticity, in which the male was the
patriarchal authority and breadwinner, led the economists to view household labor as “women’s
work”. Today, due to the influence of androcentric roots, contemporary economic analysis still
excludes “women’s work” (Nelson, 1996, pp. 32-33, 60-62).
These androcentric roots and Victorian ideology were even observed at the time by John
Stuart Mill, a British philosopher, political theorist, and economist. In his essay, The Subjection
of Women, written in 1869, Mill noted the oppression of women and the devaluation of their
productive contributions. “All women,” he observed, “are brought up from the very earliest
years in the belief that their ideal of character is very opposite to that of men; not self-will, and
government by self-control, but submission, and yielding to the control of others…it is their
nature to live for others.” (Feminism: the Essential Historical Writings, 1972, p.168). This bias
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view of women and the belief that it was their nature to live for others caused the influential
neoclassical economists to label certain laborious activities as “women’s work”; categorizing
certain activities as natural duties rather than productive work.
Soon after Mill’s Subjection of Women was published, Alfred Marshall published
Principles of Economics in 1890. In Book IV of Principles, Marshall supported the Victorian
notion that women had a place in the home rather than the work place. Taking on the role of
caregivers, forgoing market labor, would yield marginal benefits that would outweigh marginal
costs; he based his logic on the ‘human capital’ theory. Marshall argued that this would enhance
the environment in which male workers and their children live, adding to their character and
ability. It would be women’s duty to support their husbands and children and to devote their
time to investing in the human capital of their husbands, the male labor force, and their children,
the future labor force (Pujol, 1992, p. 122-123). Marshall theorized that women’s participation
in the labor force, conversely, would be detrimental as it “temps them to neglect their duty of
building a true home and investing their efforts in the personal capital of their children’s
character and abilities” (Pujol, 1992, p. 126). This view of women’s duty to invest in the human
capital of others illustrates not only the biased, Victorian opinion at the time, but also
demonstrates the productive and fruitful consequences of non-market activity or unpaid labor;
countering the unproductive view of “women’s work” and upholding the indirect ability of nonmarket activity or leisure time to contribute to economic growth. Marshall’s biased view of
women skewed his studies and the theories presented in his influential works.
Women must consider the opportunity cost, or loss of benefits that could have been
received by taking an alternative action (Investopedia.com, 2013), of foregoing unpaid
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housework in order to procure paid market work. Vandana Shiva posits that poverty is
subjective in definition and is culturally conceived. According to Shiva,
“culturally perceived poverty is not necessarily real material poverty: subsistence
economies that satisfy basic needs through self-provisioning are not poor in the sense of
deprivation. Yet the ideology of development declares them to be so because they
neither participate overwhelmingly in the market economy nor consume commodities
produced for and distributed through the market, even though they might be satisfying
those basic needs through self-provisioning mechanisms…Subsistence, as culturally
perceived poverty, does not necessarily imply a low material quality of life. On the
contrary, millets, for example, are nutritionally superior to processed foods, houses built
with local materials rather than concrete are better adapted to the local climate and
ecology, natural fibres are generally preferable to synthetic ones – and often more
affordable… ‘Development’, as a culturally biased process destroys wholesome and
sustainable lifestyles and instead creates real material poverty, or misery, by denying the
means of survival through the diversion of resources to resource-intensive commodity
production.” (Ecofeminism, 1993, p. 72).
For some, the opportunity cost of turning toward market work can mean “deprivation” poverty
due to the costs of goods and services, such as foodstuffs and paid household help. Doing a costbenefit analysis, then, these women may find that subsistence agriculture and household work,
such as childcare, are the better alternative to market work in order to provide for their family;
choosing subsistence poverty over deprivation poverty; a decision that would be viewed as
irrational by neoclassical economics.
THE HOUSEHOLD AS AN ECONOMIC UNIT
The term economy comes from the Greek word oikonomos. Oikos means ‘house’ and
nemein means ‘to manage’; so, oikonomos means to manage the house or household
(thefreedictionary.com). Being at its root, therefore, it is imperative to incorporate the household
in economic analysis. Turning toward household production rather than market production can
lead to positive externalities, such as the reduction of transaction costs and resource pooling.
Positive production and consumption externalities increase a person’s utility, or quality of life,
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and can reduce the costs of production (Economics of Gender, 1998, p. 70-73), such as net
investments in the environment via sustainable practices and improved immune systems; this is
to say, that a weakened immune system, in contrast, makes one more susceptible to disease,
which can then be passed on to others in the community. It should be noted that many urban
employment opportunities, seen as productive work, are environmentally degrading.
Furthermore, switching from subsistence farming to market labor will require the purchase of
foodstuffs from industrialized farms, which can be contaminated with carcinogens; thus,
environmental and health costs can be incurred by turning to the market (Living Downstream,
2010). Industrialized farms create social costs, or negative externalities, through the use of
chemical fertilizers and pesticides. This affects both those that purchase these contaminated
crops and those that live near these industrialized farms that incur diseases and other health
issues from the pollution.
One positive externality of non-market household production is the reduction of
transaction costs due to the reduction of contracting costs, as it is generally easier and less
expensive to find people within the household to engage in an activity than outside of the
household. One reason for this is reciprocity. In many developing countries, for instance,
individuals have numerous children to help with farming and household tasks. By turning to
market work, however, the children are no longer unpaid labor but become a financial burden.
Through resource pooling, utility can be increased through a reduction in risk (Economics of
Gender, 1998, p. 72).
In a nuclear family, there is a husband and a wife. A cost-benefit analysis will be done
when deciding household and market divisions of labor. Leisure time includes recreational
activities, activities that produce goods and services not traded, and activities that are a
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combination of the previous two types, such as childcare. A cost-benefit analysis, then, is used
to determine the household division of labor; once again illustrating the rationality and
opportunity costs behind the choices of market and household labor. This is determined
rationally by considering the budget constraint, expressed as C=wL*+I+wL, and utility,
expressed as U=ƒ(C,L); Where I represents nonearned income available, L* represents total time
available, L represents leisure, w represents wage rate per hour spent working, C represents
consumption, and U represents utility; wL, therefore, represents potential earned income; thus,
the opportunity cost of one hour of leisure time equates the wage rate (Economics of Gender,
1998, p. 142-150).
The perceived irrational emotional cost of time spent away from family is also weighted
and considered in the opportunity cost. For instance, some migrant workers must choose
between deprivation poverty and raising their families; many men and women, for instance, seek
employment away from their children in order to earn money that will be sent back in the form
of remittances. One may also be influenced or pressured by cultural factors, not considered by
neoclassical economics, creating a choice between self-definition and social definition. These
equations and emotional sentiment illustrate the necessity of household production in economic
analyses as it is both productive and affects market activities.
Men earn more per hour than women, and married men typically earn more than single
men as they have wives at home to act as “support staff”, allowing the husband to specialize in
market work and increasing his efficiency (Economics of Gender, 1998, p. 77). By having the
husband specialize in market labor and the wife specialize in household labor, more market and
nonmarket output will be produced, a comparative advantage of the nuclear family. There is,
additionally, societal discrimination of occupational choice, which decreases the benefit of
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women entering the market place. Because of lack of equity, women and men can be equally
productive yet men receive higher wages than women; thus, women are receiving a lower rate of
return on human capital investments, such as education, than men. Because of this, women may
be more likely to invest in human capital that has high non-market return, an irrational choice
according to neoclassical analysis, as individuals opt to undertake “unproductive” and unpaid
labor; thus, women find themselves in a vicious circle, finding it difficult to break out of their
socially constructed roles. Occupational segregation is economically wasteful as it excludes
women from a majority of occupations, wasting human resources and reducing the ability of
economies to adjust to changes (Economics of Gender, 1998, p. 67-90).
THE INSUFFICIENCY OF QUANTITATIVE ANALYSIS
Quantitative analysis can be deceiving. Many economic indicators, such as Gross
Domestic Product, are used to calculate welfare; however, these calculations can be skewed and
include certain costs as benefits. For one, non-market production should be included in this
calculation. If women specialize in non-market production while their husbands specialize in
market production, their welfare can be greater than if both work in the market place.
Additionally, certain externalities of market production can reduce welfare, such as pollution.
Third, GDP accounts neither for distribution nor for sustainability of production (Feminism,
Objectivity and Economics, 1996, p. 119-120). Because it does not illustrate the
disproportionality of distribution, the periphery can be inaccurately portrayed, thus yielding
inefficient or counterproductive policies.
The informal sector can account for up to 42% of GDP in Africa (Liberating Economics,
2004, p. 118-119), and is therefore quite important for economic growth and development in
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many regions. This sector includes the production and consumption of goods and services not
facilitated through the market place. Micro-Enterprises are small, informal firms that employ
less than 10 employees. These firms do not have to adhere to government-mandated regulations
or pay taxes, and are established with minimal funds, typically contributed as gifts by family
members, rather than through loans.
HOLISTIC ECONOMICS: HOMO ECONOMICUS AND HOMO RECIPROCANS
Homo Economicus is masculine by nature, productive, self-interested, rational, and an
agent of the market. His female counterpart, Homo Reciprocans, is humanistic. She has a “low
rationality stimulus” (Reciprocity and Economics, 1998, p. 847) and reacts in response to
actions. Simply put, a desire to be kind and voluntarily donate her time and efforts is
reciprocated from kind acts, and hostile responses are in reciprocation of hostility (Reciprocity
and Economics, 1998, p. 847). Productivity in the market place can be influenced by reciprocity.
For example, “reciprocity-based extra-effort is reduced in a hostile work environment”
(Reciprocity and Economics, 1998, p. 850), and verbal positive reinforcement by management
can promote increased productivity and output, all without financial incentive. Assuming all
agents of the economy are strictly masculine is a normative view, instigating a fallacy of
composition, or fallible assumption that what is true for the part is true for the whole
(Macroeconomics, 2010, p. 17-18). On reason for this assumption is due to the androcentric
roots of economics. Because men were seen as the breadwinners and women were seen as the
caregivers, neoclassical economics assumes that economic agents hold masculine or male traits
while those that bare traits of Homo Reciprocans are at home performing their natural duties.
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CONCLUSION
The economic consequences of patriarchy have led to the “application of bourgeois
Victorian values”, labeling certain work as “women’s work”; thus, skewing economic analysis,
and leading to the marginalization of women. These neoliberal policies (Liberating Economics,
2004, p.116) have lead to the disproportionate burden of unpaid labor, the feminization of
poverty, occupational segregation, and unequal pay and rate of return on human capital
investment. Neoclassical economics overlooks non-market variables as well as the multiple
identities or intersectionality of sex, race, ethnicity, class, sexuality, and nationality of economic
actors. Neoclassical economists also assumed that one’s biological sex was equivalent to one’s
socially constructed gender; assuming all men resided purely on the masculine end of the gender
spectrum, and women on the feminine end.
By expanding the character traits of these economic actors to include masculine and
feminine traits, and understanding that the complexities of these persons will influence their
decision-making, a more thorough understanding can be achieved. Examining productivity,
moreover, beyond the scope of market-orientation will yield more just and wholesome decisionmaking and policies. The execution of economic growth and development could also be more
accurately studied and promoted with a more holistic view of the economy. It is imperative,
then, that economic analyses incorporate non-market factors, and expand the understanding of
rationality to include various actions of economic agents that are intersectional and which are
influenced by both market and non-market variables. It is also necessary that a gender analysis
be conducted of economic theories, mitigating inequity and inaccurate analyses; breaking this
vicious cycle sustained by androcentric roots and their contemporary application.
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