Question

Hayden and Josh are roommates. They share one bathroom. If Josh cleans the bathroom, it takes him one hour. If Hayden cleans the bathroom, it takes him 30 minutes. They both clean the bathroom equally well and both find the job disagreeable. Each of them experiences unpleasantness valued at $100. This $100 accounts for both the opportunity cost of their time and the unpleasantness of cleaning the bathroom. (Another way of thinking of this is that each would happily pay $100 or less to avoid cleaning the bathroom.) When the bathroom is clean, they each experience $75 of well-being. (The feeling they get from a clean bathroom is equal to the value they would get from someone giving them $75.) This $75 captures all the well-being they get from the clean bathroom, including how they feel about the benefit to others who visit or live in their household.

a. If Josh cleans the bathroom, what is the total benefit for the household? Does this exceed Josh’s costs?
b. Do you think that Josh will willingly clean the bathroom? Why or why not?
c. Can you think of a ‘regulatory’ solution to their bathroom cleaning problem? Explain.
d. Can you think of a ‘market-based’ solution to their bathroom cleaning problem? Explain.

Answer 1

a) The total cost for Josh is $100, which exceeds the benefit of $75. Thus, the total benefit for the household does not exceed Josh's costs.

b) The cost of cleaning is higher than the benefit, Josh may not find it worthwhile to voluntarily undertake the task.

c) The regulatory solution aims to distribute the burden of cleaning equally between the roommates, addressing the issue of unequal costs and benefits.

d) A marketing based solution is by outsourcing the task to a third-party cleaning company

How to identify the total benefit?

a. When Josh cleans the bathroom, the total benefit for the household is the well-being gained from a clean bathroom, which is $75. However, Josh experiences unpleasantness valued at $100 when cleaning the bathroom. Therefore, the total cost for Josh is $100, which exceeds the benefit of $75. Thus, the total benefit for the household does not exceed Josh's costs.

b. Josh is unlikely to willingly clean the bathroom because the cost of cleaning, which includes both the opportunity cost of his time and the unpleasantness of cleaning, exceeds the benefit of having a clean bathroom. Since the cost of cleaning is higher than the benefit, Josh may not find it worthwhile to voluntarily undertake the task.

c. A regulatory solution could involve creating a schedule or rotation system for cleaning the bathroom. This could be enforced through a roommate agreement or household rules, ensuring that both roommates take turns cleaning the bathroom. By establishing a clear and fair system, the regulatory solution aims to distribute the burden of cleaning equally between the roommates, addressing the issue of unequal costs and benefits.

d. A market-based solution could involve hiring a professional cleaning service to clean the bathroom. By outsourcing the task to a third-party cleaning company, the roommates can allocate the cost of cleaning to the market in exchange for the benefit of a clean bathroom. This solution allows them to trade their monetary resources for the service of a clean bathroom, thereby resolving the issue of unequal costs and benefits through a market transaction