Labor leisure choices under the Divine Economics Frame work:
Labor-leisure choices have been explored by the social scientists in a conventional rigorous manner. It has been taken as a residual demand function (Labor supply models), as well as in the joint utility (consumption and leisure bundles) maximizing frameworks (e.g. varian, 1992) . Leisure choices are taken as consumption expenditure choices, where one tends to have time for consuming what she has earned from the market labor hours provided. Where as in our analysis which is based on a tradition of divine revelations by Imam Mosa Kazim (A.S), it is taken as an allocation which has both the expenditure choices as well as investment choices. It is synonyms to emerging viewpoint about educational expenditures as an investment, which are differentiated from the consumption expenditures.
As noted by Zaman (2005) that Current Economic theory is firmly set in the mold structured by Adam Smith (1776) where the objective is to look into factors which affect the wealth (and hence power, prosperity) of nations considered as a whole. This makes economic striving into a rat race, where everybody strives to get ahead but net gain to society is zero among the wealthy.
The objectives of the present study is to develop a theoretical framework following Hamdani (2003), which incorporates the faith as an overarching principle for human resource allocation decision and see its implications on different aspects of wellbeing. Secondly the paper would estimate the leisure choices using the Divine Economics framework of Hamdani (2003) and Hamdani et.al (2004) for resource allocation.
Theoretical Background
Conventional concept of human being as an economic agent is very narrow, rather abstract which has no linkage (which emphasizes the need to develop an interdisciplinary approach to human development) between why man was created, its objectives of life and time path it carries, the promised resources, what he has to do in his different stages of life (the natural cycle) and finally where would he move after that cycle on this earth.
In all religions it is proposed that the Humans are created for a divine cause and their lifecycle on earth is not merely to be the best in terms of what they eat, Wear, or which social status they enjoy etc but the supreme objective is to obey GOD and enjoy the blessings of GOD by recognizing them. As noted in Al-Quran 51:56 , narrated by Zaidi (2005) that God has created Jinns and mankind only for serving God. Further it is stated in Al-Quran 67:2 that God created death and life so that The He may test which of you is best in deeds. Also Jaffar Hussain (2004) quoted the will of Ali ibn-e-abi Talib (A.S) to his son Hussain ibn-e-Ali (A.S) in Nahejul Balagha; that remember! You are born for the life after death, and not for the world, you are created to be mortal and not for immortality, you are created to be died and not for life, and you are in such a state which has nothing as right, but it’s a place which is to provide for the luggage of life after death and this state is a pass for that (life after death).
Zaidi (2005, pp 88-89) stated that God created mankind as a distinguished species, provided them guidance , and then after granting them freedom of action , put then on trial through their worldly lives. Further in Al-Quran 48:28 it is stated that the true religion (Islam) will prevail over all other religions. That would be through Imam Mahdi (A.S) and would cover the entire world and by that time there would be love, peace, security and prosperity, which previously would be hate, tyranny and hunger. That is only possible if the core concept of human well being and happiness is understood through the divine revelations and then certain institutional and policy parameters are identified for both micro and macro prescriptions.
Economics as a behavioral science is not confound only to the study of conventional economic causes now, rather a broad range of interdisciplinary causes can lead to economic behavioral outcomes. Neoclassical economic school of thought purports rational choice, selfish behavior and utility maximizing approach for economic agents. Empirically and theologically this might be a restrictive set of assumptions. As Zaidi(2005) notes that there is a clear separation of ethics from economics and there is an obsession of making economics a more positive science to such extremes where human considerations are devoid.
Economics as a subject is a description of Human behavior, for a particular scope, where the human is an economic agent with certain scenarios and objectives, thus using frame work such as utility, which is not based on material content, rather it is based on subjective content; the agent’s behavior is thus described by establishing money metric utility functions and opportunity cost of time in money equivalent terms. By using local non-satiation assumptions more money resources are defined to lead to more utility and thus subjective wellbeing. Where as a non-conventional approach of defining time-metric utility functions and expanding the decisions horizon from finite to infinite, i.e. including life after death period (Hamdani and Khalid, 2003), with varying weights for individuals with different levels of faith leads to such normative outcomes which develops coherence in societal joint welfare objectives and individual welfare objectives. These objectives are time consistent, pareto optimal and welfare maximizing competitive outcomes as well. However these faith indices developments are yet purely subjective and need to develop sound and consensus based technical grounds, as pointed out by Nadeem (2002) and Siddique (2007) (see Hamdani, 2007 for further discussion).
Hence the holistic objective of a Human being would be to maximize her wellbeing through allocation of her allotted (for her life cycle) resources on a number of aspects of her life. In that the resources are transformed through a complex transformation from one real space to the other.
e.g. from the available 24 hours, after taking away the compulsory time (this may also vary from person to person, depending on one’s health from psychological, spiritual, religious and physical perspective), the time space would then be converted into money space for carrying out money dependent transactions.
I.e. Rtn Ω RIn
Where Ω is the positive monotonic transformation where time inputs are converted into money resources based on parameters such as human capital, social capital, technology and religious capital etc. Here the small t represents the time resources real space, and I is the nominal income space. However not all the time resources are converted in monetary resources, because human wellbeing is maximized by investing direct time inputs as well. Similarly the income resource are then transferred interms of consumable commodities both the durable and non-durables. As the nature of these transformed variables is different from the input/resource variables hence their space does not necessarily present the same structure as the former.
Therefore it becomes objective to explore such parameters which are not necessarily in the same metric as of the inputs. In our case, for the utility functions, a conventional method is to use the money metric utility functions to gauge the marginal increase in the utility through the increase in resources (income) and describes as the marginal impact on the utility subject to change of one unit increase in the income . This becomes the micro- foundations to different micro and macro policy prescriptions, which identifies that the material resources are the only source of utility as it is subjectivised to the money metric resources. So the conventional theories would suggest the more (income) the better (interms of welfare) would be the individual (whether a human unit, household, society or the country etc).
This interpretation might also lead to wrongly conclude from literature of games that a rational player would choose to maximize his payoffs regardless of the opponents welfare given they have strategic advantage. Where as in the literature of games (e.g. see Camerer Colin F. 2003,pp 56-57) results of dictator ultimatum games show tendency towards more fair allocation rather then skewed towards their own welfare maximization.
The above graph shows that among 25 pairs of players dividing $13 through playing a dictator game which was conducted by Frey and Bohnet (1997) with displaying one-way ID and information, showed that although the offerer were allowed to take all as it was a dictator game but there were no persons who took nothing for himself and gave away all to the opponent . Although there were 12 percent of the dictators in game who took almost all of the bounty. But majority of the player were in the region where the divisions were between 31% to 60%, and the average take by the dictator was just 52%.
This result is clearly indicating that if only subjective utility maximizing economic agents with money metric criteria is taken then it would be a wrong criteria for positive analysis, and basing policy recommendations on even less then 12 % of the sample would be a statistical nightmare.
Economics of well-being
The above discussion leads us to further investigate that what are the decision criterias for individuals then. According to Stanfford Incyclopedia of Philishopy; Well-being is most commonly used in philosophy to describe what is non-instrumentally or ultimately good for a person. And ‘Happiness’ is often used, in ordinary life, to refer to a short-lived state of a person, frequently a feeling of contentment. According to the utilitarian approach maximisation of human well-being is the supreme objective of life, and adding to it the conventional theory of social contract, welfare in a pragmatic sense (both material, non-material and equitable) for the whole society and in fact for the whole human kind. Philosophically Happiness scope is more wider, encompassing a whole life. Focusing on some aspects about happiness of a person\'s life, or of their happy life, could give wrong results even if that person was in fact is usually pretty miserable.
In a utilitarian approach where money from the means of exchange is converted into means for an optimality object has lead to more disparities and reduction in the true well-being of the people. Rich (by virtue of money metric system) are getting richer and the poor poorer, e.g. as zaidi (2005) wrote that in 1959 the ratio of poor to rich was 30:1 in the world which in 2001 has worsened to 85:1. Which is consistent with what was revealed in the Al-Quran, as noted in Al-Quran 4:79 that whatever good happens to mankind is from God (as the God’s creation is nothing but good), and whatever evil happens is because of mankind’s own efforts.
Theoretically the concept of individual and societal well-being from the Islamic perspective could be defined as stated in Al-Quran 16:90 that a pious (prosperous in a holistic manner) society would promote and establish Adl (Justice), Ihsan ( Sacrifice, Pardon, Kindness with selflessness) and Iyta-idhyl-qurba (generosity and kindness with relatives) and forbids Fahsha (hidden indecent acts of sin and evil), Munkar (deliberate acts of sin and evil, committed openly) and Baghyi (exceeding one’s legitimate rights, arrogance and cruelty).
So Happiness bliss point will be achieved in Mahdi era as believed by all sects in Islam. In that era the above noted prosperity parameters would be institutionally provided. Because through the learning by divine knowledge, there would be a transformation of the society in such an institution. As noted by Hamdani (2006) that for the preparation of Imam Mahdi (AS) era of global optimality from the practical perspective is that the society has to be fully aware of the huge resources provided by God and the faith based state of the art usage of these resources, as there would be the perfection of knowledge in that optimal era.
Theory of resource allocation
Religion is practiced all across the globe with many religions and scores of believers. People tend to provide resources both in terms of self-time, earned resources for oneself as well as for the societal religious capital development. As observed above, most of the world population have some affiliation with some religion, and almost every religion have a description of human life horizon which is extended over and above the life cycle which is conventionally given in paradigms of economics. As noted in Al-Quran 11:15-16 and 64:11 that who goes after the life on earth’s well-being only (following the conventional money metric objectives) would be awarded in this earth without any reduction in their return, but there would be nothing for them in the life after death.
Hence it would be logical to adopt the frame work adopted by Hamdani(2003) where he writes
“ Hope for an afterlife reward (divinely promised benefits in heavens ) is central to consumer behavior in Islam (and in some other religions too)”
And derive the new sets of demand functions for resource allocation, which has dynamic equilibrium relations, and satisfy all tests of reliability and statistical validity with parsimony. Especially for a learned preparation of welcoming Our Imam of the time (Mahdi, A.S) requires us to find such a global optima for dynamic and static resource allocation equilibrium which confers to the totality of individual optimization process of her well-being.
Leisure Demand
Leisure is the core component of a person’s well-being, as he earns and spends time to enjoy this phenomenon which increases her pleasure from life. Conventionally leisure is taken to be the residual term from a utility maximizing (which is money metric) behavior of a consumer, where he determines the labor supply commitment and the left over is the time for leisure and consumption. In this case the leisure is taken as a commodity, which is bought back by paying a price (wage), hence it becomes a kind of an opportunity cost and taken as an expenditure. This is the conventional approach, in our analysis we take it from the perspective that there is a committed leisure requirement and then over and above that is the consumer choice problem.
As every individual is in a state of dynamic optimization i.e. maximizing one’s happiness at each point of time considering the time and resource constraint and a planning horizon which goes beyond the current life on earth (Hamdani 2002, 2004, 2006). He has to obey certain natural and implicit social constraints for his lively hood. Which are defined in the divine religions. He distributes his resources in such a manner, which is based on economic rationality as per conventional school of thought where as the Divine Economics school of thought proposes various committed (necessary allocations) and optional commitments basing on a life horizon which is infinite as well as the transformed outcomes value to one’s well-being.
So in a total sense it is not the
Material objectivity of life which ensures happiness
There are certain behaviors, which encompasses those allocations, which doesn’t have a direct impact on ones material well-being.
There could be other objective functions such as time metric utility function which can be used
Now taking the utilitarian approach the quest of human being would be to maximize their living standards, and well-being which are classified as economic, social, religious and personal.
As revealed by Imam Moosa Kazim (A.S); these are;
a) Moaash (Economic Livelihood),
b) Moasharat (Social Livelihood),
c) Monajat (Religious Livelihood) and
d) Zaat (Personal livelihood)
Using Faith based model of Hamdani (2003), we can re-write the same as following:
The maximization process would be to:
Choose amounts of time and money resources (which can be converted totally in time if from income it is converted in no of hours involved) for Moash (Economic livelihood; market based earning activities; which includes objects depending on the stage of life and other circumstances, investment expenditure for human capital, other physical infrastructure, social capital, children education etc), then for moashrat (Social Livelihood: society based allocation, which are not directly related to earning in the first period and may base on social norms, rituals and practices), then for Monajat (Religious Livelihood: purely for religious aspirations), then for Zaat (personal lively hood: which include family, his personal time for rest and other necessary doings, home production, food and other recreational consumption, etc)
Subject to:
Income (those resources which are generated un-worked, e.g. bequest, donation, saving, discount, subsidy, social capital returns, family providing support etc), and time constraint
Which would give:
Over all maximum well-being rather then only metric utility or it’s that utility function which includes all of the above arguments or the sum of maximised utility of moash, moashrat, monajat and zaat.
The budget constraint which is also linked with the time for moaash i.e. the total income resource could be written as
Yi= vmi*tm+ un-worked income
Where Yi is the total available income, vmi is the value of market time, usually taken as to be the wage rate, and tm is the total time allocated to the market for earning actitivyt.
Then the total value time constraint can be written as
VT=Vi* 24= vmi*tm+vsi*ts+vri*tr+vzi*tz
Where Vi is the average value per unit of time for ith individual, vsi is the value for time spent on societal activities for ith individual, ts is the time allocated for societal activities, vri is the value for time spent on religious activities for ith individual, tr is the time allocated for religious activities, vzi is the value for time spent on personal activities for ith individual and tz is the time allocated for personal activities.
Now we can solve this model for committed and non-committed time allocation. However the following needs to be taken into account while following that:
As noted by Hamdani (2003) the goods produced (converted in time metric equivalent) are taken with reference to their satisfying characters towards the sub objective functions explained above.
Further all the goods could be either substitutes or complements if they are taken with reference to time.
Similarly the sub-objective functions also have the same characters of being substitutes or complements.
As the objective is of time allocation so we don’t use the commodity buying constraint, and that is also built in the time constraint as the earning and from zaat the consumption is there.
Depending on ones’ religiosity or the faith developed, the choice bundle can vary and each time allocation bundle will carry different value to oneself .
Conventional stock of knowledge take these allocations as mutually exclusive, where as the true and divine source of knowledge reveals to us that investing time in a prescribed, natural way would not only lead to a rational and fair allocation of these resource but also lead to a maximum potential level of ones’ well-being (Imam Zain-ul-Abdin (A.S) in Iqwal-e-Chhardeh Masoomeen). There would be a substitutability and complementarity relations in these resource allocations towards achieving the goal of maximizing the well being of individuals. These optimal choices are mostly complimentary if taken in a faith-based model (See Divine Economics Framework e.g. Hamdani 2003) and mostly substitute other wise.
One of the four parts of time allocation i.e. time for personal livelihood (zaat) development which, according to Imam Mosa Kazim (A.S), actually reinforces other set of allocations and thereby leads towards reaching a global maxima of individual happiness or satisfaction. As now the allocation of their time based normalized resources are in a dynamic and a life horizon model considering among other resource constraints; the environments he/she is present or has a tendency to develop in future, such as Human Environment (which includes Nature, type and quality of human beings around the individual in perspective of their knowledge, skills, behaviors, faith, moral values, beliefs and associations).
This model is developed in order to explore the following hypothesis:
1. A more religious person would tend to develop a human environment which is futuristic; Time allocation of a more religious person would be more balanced
&
2. Longer Prostration reduces biological need for rest and sleep thereby sparing time for other allocations, thus have macro implication
Data and methodology
Divine economics Model for leisure based on Hamdani (2003), would be used. Which is described as
For present analysis the Divine Economics Survey-VI; Survey of Religiosity and Rehabilitation Patterns in Earthquake Affected Areas of Pakistan & AJ&K (2006) for 764 households in Azad Kashmir and Pakistan conducted by Harvard University is used.
Estimation results
Table10.4: Mean Time Allocation
Earthquake
Before After
Moash (Economic livelihood) 7.66 7.13
Moasharat (Social Livelihood) 2.85 3.10
Voluntary Time 0.72 0.95
Monajat (Religious Livelihood) 2.04 2.18
Zaat (Personal Livelihood) 9.49 9.06
The quest of human being is to maximize their living standards; whether they are Moash (Economic Livelihood), Moasharat (Social Livelihood), Monajat (Religious Livelihood) and Zaat (Personal livelihood). A comprehensive analysis is required in the present situation to recommend policy measures. The mean time allocated to the above time uses, by the respondents has been changed after earthquake. The time allocated to economic livelihood has been reduced, while this time has re-allocated to social livelihood, Monajat and voluntary work. The personal livelihood time has also reduced while religious livelihood time increased. Our results show that almost 31% of the respondents almost daily discuss rewards and punishment of deeds with the human environment he is living in.
Further 85.4% do it on a regular basis. Where as almost 75% discuss even the futuristic religious variables, as a rationale faith based human beings they develop moral and other behaviors. The mean time allocated to the above time uses, by the respondents has been changed after earthquake. The time allocated to economic livelihood has been reduced, while this time has re-allocated to social livelihood, Monajat and voluntary work. The personal livelihood time has also reduced while religious livelihood time increased.
Conclusion
A very small set of socio-cultural-personal and religious dimensions for appreciating the Mahdaviat principles of an ideal human life were brought into economic analysis in order to make the subject of economics more closer to real life phenomenon of present time as well as the time to come.
But clearly there is an ample need for developing our understanding and presenting to the world how practical in maximizing global welfare is the Mahdaviat era.
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