From Pain Cost to Opportunity Cost: The Eclipse of the Quality of Work as a Factor in Economic Theory

Early debate within neoclassical economics is characterized by disagreement over the nature of cost and its influence upon the supply of labor. On the one side, William Stanley Jevons ([1871] 1970) argues in support of the psychic measurement of the "pain" or "disutility" of actual work done. He links labor supply to the subjective experience of work itself. On the other side, Austrian writers focus upon the importance of the alternative uses, or "opportunity cost," of work time (see Green 1894). In their view, workers resist supplying their labor due to the allure of leisure time. This debate, at root, concerns the origins of utility. Is utility to be considered the product of consumption alone, or can labor be regarded as a source of utility in its own right?

This article examines the origins and evolution of the theory of cost as applied to the labor-supply decision. The early controversies concerning cost have been the subject of little discussion in modern debate, either within or without the history of economic thought. Yet the way these controversies were resolved has had an important bearing upon the nature and scope of subsequent economic inquiry. In the analysis of labor supply, as argued below, the rejection of Jevons's notion of the disutility of labor in favor of the Austrian concept of opportunity cost has culminated in the eclipse of the quality of work as a factor in economic theory.

This article brings new light to bear on the development of the neoclassical theory of labor supply. It is divided into three main sections. Section 1 considers Jevons's original definition of the disutility of labor. Jevons gives due consideration to the qualitative aspects of work time, and he recognizes explicitly the effects of the intrinsic costs (and also benefits) of work activities on workers' motivation to supply labor. Section 2 considers the Austrian counterchallenge to Jevons's conception of the disutility of labor. Austrian economists seek to redefine the cost of labor in terms of the loss of leisure time rather than in terms of the direct pain and pleasure of work activities, and this in turn leads to the eventual conflation of the disutility of labor with the utility of leisure. Section 3 discusses the implications of the triumph of the Austrian notion of opportunity cost within the economics literature on labor supply. That triumph has drawn a veil over the independent effects of the quality of work activities on the welfare and motivation of workers.

1. Work as Pain and Pleasure

William Stanley Jevons ([1871] 1970), as is well known, suggests that goods exchange for one another in accordance with their respective marginal utilities. This applies where exchange occurs from a fixed stock of produced commodities. Where supply is variable, there is also the cost of production to consider. Jevons's own analysis of cost draws on his conception of the work decision. The cost of labor is identified with the "pain cost" or "real cost" of labor itself. This cost is important because it limits the opportunities for consumption: "Labour is found often to determine value, but only in an indirect manner, by varying the degree of utility of the commodity through an increase or limitation of the supply" (Jevons [1871] 1970, 77). Labor is to be understood as furnishing that which affords utility or value to consumers, namely commodities. Just as subjective feelings attend the act of consumption, however, so they are a feature of the act of labor. Indeed, the sensations of pain and pleasure experienced by workers through the performance of work activities determine how many commodities are available to consume. Jevons suggests that the same "pain-pleasure calculus" applies whether one considers the individual as consumer or worker.

Jevons identifies labor with "painful exertion," though...