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Hidden assumptions about the economy

On the front page of Suday’s New York Times, the primest of prime real estate, Hiroko Tabuchi writes:

As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect. . . . Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

How is this “disastrous”? Using bath water to do laundry makes sense to me. Unfortunately our apartment is not set up to do this, but why not? Cars are much better made than they used to be, probably most people in Japan who want a car badly enough have one already, so it makes sense that car sales would fall–people can continue driving their dependable old cars. Finally, I have nothing against whiskey, but is it really “disastrous” that sales have fallen to a fifth of their peak? Fads and all that.

Sure, I can see that this is all evidence that Japan’s economy is far from booming, but I’m a bit disturbed to see frugality treated as a “disaster” in itself.

What really bothers me, though, is that the assumptions in the article are completely unstated. I’d be happier if the reporter had written something like this:

You might think that it’s a good thing that the Japanese have become more energy-efficient and less into trendy conspicuous consumption: even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills, and sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak.

Even the notorious Japanese tendency to buy new cars and appliances every two years, whether they need it or not, has abated. The nation is losing interest in cars–sales have fallen by half since 1990–and people are sticking with old-fashioned television sets rather than snapping up expensive flat-screen TVs.

But this frugal behavior is having a disastrous effect [or, is symptomatic of an underlying economic disaster]. . . .

This puts the assumptions front and center, at which point they could quote experts on both sides of the issue or whatever.

P.S. Just to be clear: my point here is not that a newspaper reporter wrote something I might disagree with, but rather that sometimes people seem trapped within their unstated assumptions. (Yes, I’m sure that happens to me too.)

13 Comments

  1. I can't resist reply to the comment in the newspaper about "well-off Japanese" doing their laundry with old bath water to do laundry. It sounds like one of things people (even the Japanese) love to invent about the Japanese.

    It's possible some Japanese use old bath water, and in more rural parts of Japan (where people can indeed be pretty well off, by western standards) it's plausible they'd use it if they don't have access to a clothes washer, but I doubt that's generally the case.

    Does the author present evidence? If she doesn't she's making it up.

    Do they have fact-checkers in that magazine like they describe in the recent New Yorker article? If so, they should fire them.

    [end of rant]

  2. derek says:

    I know little about Japan, but am I right in thinking their bathwater is a lot less gray than our bathwater, as they basically wash themselves before getting in? It seems then like a splendid idea to use that "light gray" water for laundry.

    But yes, I'd like to see a proper setting out of why the reporter thinks lower consumption is a bad thing for everyone. I suspect it's just a bad thing for the minority who make a profit selling the rest of us junk. Since that minority get most of the GDP, they can point to the lower GDP and say "Look! Bad for the economy!" while most of us (thanks to the Gini coefficient) are actually better off.

  3. Daniel Lakeland says:

    Hidden assumptions are at the root of a LOT of problems at the moment. Witness:

    Assumptions rampant in the government, media, and populace:

    1) The government can do something meaningful about the financial problems we're having.

    2) The government, if it does something, will generally improve the situation.

    3) We should strive to keep people in their houses and stop foreclosures.

    4) We should not let american automakers go bankrupt.

    5) American Automakers are a significant portion of the american economy (What's bad for GM is bad for America)

    …. The list could go on and on. There is basically no meaningful discussion about these kinds of assumptions. But I think many if not most economists would say that essentially all of them are obviously false to some degree or another.

  4. Alex Cook says:

    Shravan:
    Japanese wash outside the bath, not inside it, so that the water can be used by the whole family without getting dirty. In fact the same water is often used for several days before being replaced. Japanese washing machines are toploading and typically found in the changing room outside the bathroom, and there's always a bucket in the bathroom for washing with that could readily be used to take the water from bath to washing machine.

    Given that the author is clearly of Japanese decent, if not Japanese herself, I don't find the story at all ridiculous.

  5. Corey says:

    The Japanese custom of washing outside the bathtub is probably due a tradition of communal bathing that saw a resurgence after the firebombings of WWII destroyed much of the infrastructure of the country. [wikipedia]

  6. anon says:

    Corey, I think the article may have this sort of bath in mind.

    In the revised version we don't get to the economy before paragraph 3; can it be mentioned earlier, while still explaining the unstated assumptions?

  7. Alex:

    yes, I know how the Japanese bathe; I spent five very pleasant years in Japan :-). I also know what the bathtub looks like, I used one like that too.

    The thing is: during my time in Japan, I got an opportunity to live with Japanese families for extended periods (including some rural farmhouses in Kyushu and Honshu), and used to be going in and out of houses of Japanese friends in Osaka, Kyoto, and Kobe. I've never seen anyone not use a washing machine. I can imagine that some people might do what the author suggests, but I doubt very much it's widespread, otherwise I'd have seen it at least once.

    I'm happy to be corrected, of course, but this being a (bayesian) statistics blog, I'd like to see some hard numbers to back up that claim before I believe it. Besides, my prior beliefs (based on anecdotal evidence, I have to admit) strongly predispose me not to believe that statement ;-)

  8. Phil says:

    I don't see anything wrong doing things the old fashioned way. If Japanese people wants to do it that way then let them be. If they don't want to spend their money luxuriously just let them be. They're just starting to learn to save money for something more important. No need to take this against them.

  9. Jouni says:

    The ridiculous thing is that saving on home utility bills is compared to saving on consumer products such as beverages and vehicles.

    In Japan, water is expensive, and the (hot) bathtub is entered only after washing – so for a Japanese, throwing that water away will sound like waste. As it should sound like waste to an American as well. Outright waste should be always out of vogue, even in times of abundance.

    And why blame the thrifty consumer? One could as well blame the companies that are simply not producing anything that the thrifty consumer would want to buy… as they say in Japan, "customer is God."

  10. ZBicyclist says:

    It was common on washers in the 1950's to have a "suds saver" setting — the water got pumped out to a nearby receptacle, most commonly an old wringer washer.

    I was a child at the time. I think how this worked was that the rinse water from load 1 would become the wash water for load 2.

    This disappeared on later models, probably because of lack of demand.

    On Andrew's larger point, it's not clear that consumer frugality leads to less consumer happiness — and isn't that what it's all about? If it makes somebody happy to drive an older car that gets better m.p.g., so be it. If they save their money, they are less likely to be heavy users of government entitlement programs later. Is that somehow wrong???

    Marketing is supposed to be about what people need, NOT about what people are supposed to buy in order to keep the economy moving.

  11. Dimitris says:

    I realize that some the participants in this discussion make some inferences that are not based on sound assumptions. A large fraction of the consumer expenditure in labour intensive industries is spent on workers' wages. When the demand for goods produced by those industries is falling, the workers suffer as much as (or probably more than) the shareholders and the managers (note that the tax-payers also suffer since they are the ones who pay for unemployment benefits). Thus buying those "junk" products not only raises the profits of the big bosses but also makes employment more possible for the workers.

    But is it rational that so many resources (human, capital etc) are utilized on producing "junk" products? Our answer should be no. We can ,however, change this by transforming ourselves into more responsible consumers. A national product composed of (the value equivalent of) trash movies, of unhealthy products, of poluting and unnecessarily luxurious cars is not the same as a national product of the same level composed of cultural goods, of good education and of good health services.

  12. Dimitris says:

    Note also that the Gini coefficient measures the inequality of income distribution and not the purchasing power of the middle/lower class. Thus an improved (i.e.) Gini coefficient could also mean less purchasing power for all socioeconomic classes.

  13. queenpocupine says:

    About using bathwater for laundry…
    I am a longterm resident of Japan (and we are well-off), and we do this (and I think most Japanese do). It's really easy. The washing machine has a hose that snakes out to the nearby bath. By pressing a button on the machine you can tell the washer to use the bathwater for just the wash, or also for the first, or first and second rinses. Modern machines all have this feature. The bathwater is clean since it's just used for soaking. Also water bills are really high here. I pay more than $150 a month for water.
    I can't imagine how spending more on a public utility would help the economy.
    As for not buying more stuff, there's no place to put it. Nowadays it costs a lot to throw out old appliances, and it is complicated, too.