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Exercises · Q13

Q.Why is it difficult to estimate the value of non-market services, such as the work done by a homemaker, in national income accounting?

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A homemaker's work — cooking, cleaning, child-rearing, household management — is genuinely productive: it creates real value for the household, and if the same tasks were performed by a paid domestic worker or a paid caregiver, that payment would be counted in national income. The difficulty is that when the household's own member performs this work, no market transaction takes place: there is no wage paid, no invoice issued, and no standard market price against which to value the service.

Statisticians could, in principle, try to impute a value (for instance, by estimating what it would cost to hire someone to perform the same tasks), but doing this consistently and reliably across millions of households — each with different hours, different tasks, and different implicit 'wage rates' — is judged too unreliable to build into the official accounts. By international statistical convention (followed by India along with virtually every other country), such unpaid non-market services performed within the household are therefore excluded from national income altogether, even though everyone recognises they have genuine economic value. …

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