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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 2 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 3 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, 4 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 5 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 6 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 7 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. 8 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. 9 Works Cited Bergeron, Suzanne. "Book Review: Feminist Economics: Interrogting the Masculinity of Rational Economic Man." Review of Radical Political Economics 33 (2001): 495-508. Economic Definition of Leisure. <http://glossary.econguru.com/economic-term/leisure>. Economy. <http://www.thefreedictionary.com/economy>. Enke, Stephen. "On the Economics of Leisure." Journal of Economic Issues 2.4 (1968): 437-440. Evers, Barbara. (2003). 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Pujol, Michele A. Feminism and Anti-Feminism in Early Economic Thought. Brookfield: Edward Elgar Publishing Limited, 1992. Richard L. Stroup, Russel S. Sobel, and David A Macpherson. Macroeconomics: Private and Public Choice. 2010. 10 Shiva, Vandana and Mies, Maria. Ecofeminism. Halifax: Fernwood Publications, 1993. Steingraber, Sandra. Living Downstream: an Ecologist's Personal Investigation of Cancer and the Environment. 2nd . Philadelphia: Da Capo Press, 2010. Waring, Marilyn. If Women Counted: A New Feminist Economics. London: Harper & Row, 1988. 11