If you work in an office, do you ever find yourself thinking that you could get more work done at home?
That’s the question we address in our latest podcast, “There’s Cake in the Breakroom!”
There are at least two primary perspectives on this topic:
- Employees think about how much better their lives would be if they didn’t have to deal with commuting, the office culture, etc.
- Employers think about how productivity would plunge if employees were allowed to work at home — or, as it’s sometimes known, “shirk at home.”
But there’s at least one more perspective to consider. A firm might look at the office rent it pays and think it might be worth the trade-off to let employees work at home instead. This could make sense as long as the real estate savings were enough to offset the expected drop in productivity from letting employees work at home.
So what do we know about productivity among those who work at home? While the share of Americans who work at home has been slowly rising, the fact is that productivity is hard to measure.
Enter James Liang and Nicholas Bloom. The former is a founder and chairman of Ctrip, a big Chinese travel website a la Expedia. The latter is a labor economist at Stanford. They, along with co-authors John Roberts and Zhichun Jenny Ying, have done a study called “Does Working From Home Work? Evidence From a Chinese Experiment,” in which Ctrip employees were randomized into work-at-home groups and work-at-the-office groups.
The results may surprise you — and, if you happen to run a company, you might rethink your future.
In our podcast, you’ll from Liang, Bloom, and Christine Hoehner, a public-health professor at Washington University who co-authored a study about the health effects of commuting, which we wrote about earlier here.
Tess Vigeland: Time now for a little Freakonomics Radio. Every couple of weeks, we talk to Stephen Dubner, the co-author of the books and the blog about the hidden side of everything. Hello Stephen.
Stephen Dubner: Hey Tess. You having a nice, calm, peaceful, productive day at the office today?
Vigeland: It's a newsroom, Stephen -- no such thing, right? Although we are in the dog days of summer.
Dubner: 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 look at your scripts from your favorite easy chair? Doesn't that sound nice?
Vigeland: With my cat on my lap? Well, just between us -- because nobody's listening -- yeah, I think about it all the time. But I don't think it's going to happen.
Dubner: 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 watching cat videos or watering the garden, whatever.
Vigeland: Yeah, and?
Dubner: 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 thing.
Paddy Hirsch: Sorry to interrupt, I know you're talking to Stephen.
Vigeland: Paddy? Paddy, I'm on air.
Hirsch: I know. But we need to fix this. We really need to talk about the 15th or the 22nd.
Vigeland: Stephen, I'm really sorry. Paddy, you need to give us a moment. Please continue.
Dubner: Yeah, OK. So I wanted to tell you about an interesting experiment at a Chinese company called Ctrip. 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 Liang.
James Liang: The real estate in Shanghai is getting very expensive, we're thinking maybe we should move some people at home, when the technology's 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 Liang is not your typical boss; he was actually taking a break from running the company to get a Ph.D in economics at Stanford. 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 Ctrip volunteers -- employees -- half of whom were then randomly selected to work from 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.
Nick Bloom: Their view is they'd save a money on space, they'd save a lot of money of low attrition, but they'd lose on productivity. And in fact, productivity went up.
Vigeland: Productivity went up? You were working at home and your productivity goes up?
Dubner: Exactly. Now keep in mind, these Ctrip workers were essentially call center employees -- not all jobs are as easily transferred to home as that. But that said, the home workers -- the people that worked from home -- were about 13 percent more productive than an equivalent group of office workers. Here's Bloom again.
Bloom: 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.
So some of the gains, Tess, came from people simply working more hours at home. But home workers were also more efficient. Now you say, 'How can that be?' Here is Bloom's explanation for that.
Bloom: In the office, it's very noisy, you can hear the guy next to you on the phone or the person across the desk 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 would perform better there. Others want to work in an office and would perform better there.
Vigeland: Right, so Stephen what you're saying here --
Hirsch: Tess, are you coming in to say goodbye to the interns?
Vigeland: Paddy, Paddy, I'm in the middle of work.
Hirsch: They've got red velvet cake.
Vigeland: Well despite that, I really need you to let me finish this interview. Sorry.
Vigeland: I'll be right there, really. OK.
Dubner: Sounds like you've got a little bit of experience with office distractions yourself, Tess? Yes?
Vigeland: Just a few, just a few. Cupcakes, but nevertheless.
Dubner: That said, it would 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. Here's Christine Hoehner. She's a professor of public health at Washington University. She recently finished a study on the health effects of commuting.
Christine Hoehner: 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.
Hirsch: Tess, you really need to sort this thing out. OK, so it's either the 22nd or the 15th of September.
Vigeland: Paddy, Paddy.
Hirsch: Would you make a decision, for everyone's sake?
Vigeland: Paddy, OK. Let's go with the 15th. Are we done now? Thank you. OK. Stephen?
Dubner: Tess, you ready to work at home?
Vigeland: I think I just might be.
Dubner: Have I won you over?
Vigeland: 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 on Freakonomics.com. Stephen, we'll talk to you in a couple of weeks.
Dubner: I hope so, thanks.