Do DIY projects make economic sense?
Millions of Americans engage in do it yourself (DIY) home improvements. Each summer I choose a project, and about half of the time I actually do it. This year’s project is painting our house’s exterior windows and trim. And yet DIY produces professional angst for me as an economist, because core economic principles imply that I should hire someone for home projects.
About two thirds of American homeowners typically report planning a DIY improvement task. The more than 4,000 Lowe’s and Home Depot stores nationwide largely cater to DIYers. Cable TV channels, magazines, blogs, and YouTube videos assist aspiring DIYers.
DIY, however, ignores the principle of comparative advantage. What does this mean? Suppose that I could have hired a professional for my painting project for $1,000, plus the cost of paint. Paying someone would have taken me less time than doing it myself. This might seem trivial, since I could just watch if I paid someone, but holds even considering raising the money to pay for the job.
Why? I can earn $1,000 working as an economist faster than I can paint. Alternatively, I could earn more than $1,000 in the time I’ll spend painting. I am skilled as an economist (although some of my students might disagree), while painters are better at painting. Comparative advantage shows that we will both be better off by focusing on what we’re good at. Teaching a summer class is a faster way for me to paint my house.
Comparative advantage applies for other projects – decks or landscaping the yard – and other professionals – doctors, plumbers, basically everyone. Much of our modern prosperity is due to specialization based on comparative advantage and buying what we need and want.
Closely related to specialization is another fundamental economic principle, the division of knowledge. A pro knows more about painting than I do; they will have and know how to use all the latest tools. A DIYer is more likely to waste wood building a deck due to mistakes a pro will avoid.
DIY could even make us poorer. If twenty families in Troy decided to build decks themselves this summer, they would likely waste a lot of wood and other materials making the similar mistakes. One specialized company could more quickly and efficiently build all twenty decks.
And yet I am probably painting as you read this. Am I crazy? Perhaps, but let’s not go there. My depiction of comparative advantage, however, does omit several things.
Many people cannot work extra hours (for pay at least) to earn the cash needed to pay for home improvement projects. Opportunities for overtime may not come when you want to do a project. DIY purchases a deck or fire pit we otherwise couldn’t afford using our spare time.
Having workers come into your house is also inconvenient. Hiring a painter or contractor is a hassle. Good contractors are often referred by friends, so you may end up with an unreliable one. (Many free-market economists have contractor horror stories, which should perhaps make us rethink how well markets work.)
Emotional considerations also factor in. DIY was part of life in the Sutter home growing up. We did things like put a new roof on the garage and build a deck, and we helped friends with such projects. I learned DIY before economics, and maybe some lessons are hard to unlearn. Many people enjoy working on their home, which factors into consideration.
Specialization leads to the creation of so much new knowledge that it limits our ability to DIY. YouTube videos level the playing field some, but only help someone who is already handy. The ability to DIY is valuable, even when we choose to pay others to do our tasks. The growing percentage of Americans not confident about changing a flat tire will be dependent on road service.
Good luck with your summer projects DIYers. You probably don’t have to worry while working about failing to apply basic principles you teach students. Perhaps painting my house makes me a bad economist; if so, I’m glad I have tenure!
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.