The economics of DIY (part 1)

It happened that for the umpteenth time I had to do something around the house (replacing and re-wiring the towing socket on my truck) and the task seemed so trivial that I could not face the hustle of ringing a local business (garage) rather I decided to do it myself on a quite Saturday afternoon. I googled the instructions, watched a 5-minute video on YouTube on how to do it and after about 2 hours of fiddling with the wires (it is a 12-pin socket!) it was done.

Of course whilst my DIY-self was contentedly looking at the fruit of his efforts, the economist in me immediately posed the question. What impact did my little venture into auto electrics have on the economy? More generally, what does it mean to the economy that people are able to do simple tasks around the house thanks to readily available tutorials and instructions on the Internet?

Frankly, it would have never occurred to me to attempt this re-wiring job had I not been able to get detailed guidance from the internet. 15 years ago I probably would have just taken my truck to the garage and had the job done (except 15 years ago I was still a broke university student with a bus pass as his only means of transport). And it must be the case that there are millions of others around the world doing exactly the same, which poses the question: did the internet (and easily accessible DIY tutorials) shift these small-scale jobs from qualified craftsmen to the consumer? Put differently, have businesses lost some/lot of the income from small-jobs and have these costs been internalised by households?

Of course empirical measurement of the informal economy may not be trivial but one could look at the list of jobs small garages, plumbers, electricians, etc. take on and see if there has been a change in the distribution of what they do – i.e. are they doing less of these small-scale jobs?

And then of course comes the more important question. Was it an efficient development of things that small-scale jobs around the house are now less likely to be done by small businesses of craftsmen, rather they have been internalised into the functioning of a household? (For the purposes of this post let us put aside the non-trivial issue of the risk caused by a botched DIY job.) On the plus side, households save money by not paying for a service, although it comes at the opportunity cost of not being able to do something else in the meantime. For example in my case the rational agent should have taken the car to the garage as I could have put my time at financially more rewarding use. But accomplishments are also rewarding – in a non-financial sense – and humans need these little triumphs even if they do not make rational pecuniary sense. Maybe the answer is simple and obvious: the fact that people are choosing to go DIY seems to imply that there is of course much more to life than what would meet the eye of the rational calculating agent.

(Part 1 in the title implies that there’s probably more to come on this, I would really like to write a short post on the effect of this shift may affect jobs.)

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