Freakonomics Radio - 89. There’s Cake in the Breakroom!

Episode Date: August 22, 2012

If you think working from home offers too many distractions, just think about what happens at the office.

From APM, American Public Media, and WNYC, this is Freakonomics Radio on Marketplace. Here's the host of Marketplace, Tess Figlin. It is Freakonomics time. Every couple of weeks, we are talking with Stephen Dubner, co-author of the books and the blog about the hidden side of everything. Hello, Stephen. Hey, Tess. You having a nice, calm, peaceful, productive day at the office today?

It's a newsroom, Stephen. No such thing, right? Although we are in the dog days of summer. Let me ask you this, Tess. You ever fantasize about just working from home instead? Maybe setting up a little radio studio in your living room and you could, you know, look at your scripts from your favorite easy chair. Doesn't that sound nice?

With my cat on my lap. Well, just between us because nobody's listening. Yeah. Yeah. Yeah. I think about it all the time, but I don't think it's going to happen. Well, you know, bosses tend to have a kind of standard line of thinking here that, you know, left to your own devices, you'd spend all day, you know, watching cat videos or

watering the garden, whatever. And? That's why it's sometimes called shirking from home rather than working from home. But today, I come, Tess, bearing evidence that working from home might actually be a great— Hey, Tess, I'm sorry to interrupt. I know you're talking to Stephen. Patty, Patty. Yeah, I know.

I'm on air. I know. Patty. We need to fix this. Stephen, I'm really sorry. Patty, you need to give us a moment. All right. Please continue.

Yeah. OK. So I wanted to tell you about an interesting experiment, OK, at a Chinese company called C-Trip. It's basically the Chinese version of Expedia, the travel website. It's based in Shanghai. The company's got about 14,000 employees. Here is the company's co-founder and chairman, James Leong. The real estate in Shanghai is getting very expensive. We're thinking maybe we should

move some people off home when the technology is ready. Then we thought, hey, this might be a very interesting academic subject if we can do it more scientifically. OK, so you've got a boss here who's thinking about saving on office rent by letting some people work at home. But Leong is not your typical boss. He was actually taking a break from running the company to get a PhD in economics at Stanford. OK, and that's where he met a labor economist named Nick Bloom, and they decided to set up this work at home option as a real experiment. So what they did is they recruited 500 C-Trip volunteers, employees, half of whom

were then randomly selected to work at home for the next nine months and the rest, which became the control group, they would keep working in the office. Now, here is Nick Bloom talking about what the company expected to get out of this experiment. Their view is they'd save a lot of money on space, they'd save a lot of money on lower attrition. They'd lose on productivity. And in fact, productivity went up. Productivity went up. You were working at home and your productivity goes up. Exactly.

Now, keep in mind, these C-Trip workers were essentially call center employees. OK, not all jobs are as easily transferred to home as that. But that said, the home workers, the people who worked at home, were about 13 percent more productive than an equivalent group of office workers. Here's Bloom again. They also started and stopped on time because they didn't turn up late because commuting or the plumber didn't turn up or they were sick, etc. Right. So some of the gains test came from people simply working more hours at home. But home workers were also more efficient. Now you say, well, how can that be?

Here is Bloom's explanation for that. In the office, it's very noisy. You can hear the guy on the phone next door to you on the phone call, the person across the desk, you know, crying because their boyfriend has just split up with them. It's horribly distracting. Now, Tess, Bloom does make the important point that not all employees have the same preferences, of course. Some people, you and me maybe, want to work at home and will perform better there. Others, you know, want to work in an office and will perform better there. Right. So, Stephen, really what you're saying here is – Are you coming in to say goodbye to the interns?

Patty, Patty, I'm in the middle of work. They've got red velvet cake. Well, despite that, I really need you to let me finish this interview. Sorry. I'll be right there, Really. Okay. Sounds like you've got a little bit of experience with office distractions yourself, Tess. Just a few cupcakes, but nevertheless. Yeah. Now, that said, it would be naive to think that home workers don't also get distracted. But the evidence here suggests that as distracting as home may be, the office, as you've experienced today, is even worse. And on a different dimension, getting to work can be bad for you, too.

So here's Christine Hainer. She's a professor of public health at Washington University. She recently finished a study on the health effects of commuting. So we found that people who commuted longer distances were less physically active, less physically fit, weighed more, and had higher blood pressure than people who had shorter commute distances. Whoa! So, Tess, there you've got it.

We really need to sort this job-lensing out, okay? It's either the 22nd or the 15th of September. Would you make a decision, for heaven's sake? Okay, let's go with the 15th. Are we done now? Okay, thank you. Okay, Stephen. Tess, you ready to work at home?

I think I just might be. Have I won you over? Where do I sign up? Stephen Dubner, our Freakonomics correspondent. He puts out a podcast, too. You can get that on iTunes and hear more at Freakonomics.com. Stephen, we'll talk to you in a couple of weeks. I hope so. Thanks.

On our next podcast, we talk about the shadow economy, that is, all the activity, legal and otherwise, that escapes the attention of the government and especially the government's tax collectors. Ever wondered how big the shadow economy is? Next week, we'll tell you on Freakonomics Radio. Bye.