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Can working from home increase productivity?

Our Freakonomics expert Stephen Dubner says there is evidence that working from home is better for you.

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Freakonomics Radio's Stephen Dubner discusses the hidden side -- a.k.a. benefits -- of working home. He explains that a recent experiment by a Chinese company called Ctrip shows that people working from home are more productive and are at less risk for health problems. The company conducted the experiment to save money on rising real estate rent in Shanghai, recruiting 500 employees and asking half of them to work from home, while the other half reported to the office.
 
The study's results revealed that people who worked from home were 13 percent more productive than people working in an office. The study also showed that people working from home were more efficient. Stanford economist Nick Bloom, who conducted the experiment with Ctrip, says there may be a reasons for this.

"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 just split up with them. It's very distracting," said Bloom.

Other studies show that commuting into the office is bad for you as well. A study from the Washington University shows that people who commute long distances have higher blood pressure than people who have short commutes.

Is that enough incentive for you to ditch the office?

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.

Hirsch: Geez.

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.

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coloradoprof's picture
coloradoprof - Aug 25, 2012

I am a former college professor and have been on both sides of the fence as a work from home employee and an employeer hiring telecommutors. I can honestly say that it is a win-win situation all around. Employers save money hiring telecommuters and also have a higher employee retention rate.

Work from home employees are happier due to their flexibile hours and they also save money on commuting costs.

I have personally worked from home for 12 years and would never go back to an office. I love working in a variety of legit contact jobs that pay well. In fact, I have had so many people ask me where I find my jobs that I created the "Legitimate Online Job Directory" This is a directory of free, legit, no scam, no mlm employeers hiring home based workers. If you are looking for a work from home job, this is definately the place to start.

coloradoprof's picture
coloradoprof - Aug 25, 2012

I am a former college professor and have been on both sides of the fence as a work from home employee and an employeer hiring telecommutors. I can honestly say that it is a win-win situation all around. Employers save money hiring telecommuters and also have a higher employee retention rate.

Work from home employees are happier due to their flexibile hours and they also save money on commuting costs.

I have personally worked from home for 12 years and would never go back to an office. I love working in a variety of legit contact jobs that pay well. In fact, I have had so many people ask me where I find my jobs that I created the "Legitimate Online Job Directory" at www.LegitimateOnlineJobDirectory.com. This is a directory of free, legit, no scam, no mlm employeers hiring home based workers. If you are looking for a work from home job, this is definately the place to start.

anne meanders's picture
anne meanders - Aug 24, 2012

I work from home and love it - hope to never waste time and gasoline commuting again. I can work early or late, so long as I keep my commitments to clients and my peeps. My office is cheerful, well lit, and chair, monitors, etc. are ergonomically correct. You would not believe what many workers have to go though to try to get appropriate equipment so they can work healthily! Never again will I sit in a crap chair, with crap laptop, no external monitor, in a poorly lit noisily ventilated office for 8 - 10 hours a day.

Matthew_S's picture
Matthew_S - Aug 24, 2012

Until June 4, my experience working from home had been spotty and mainly confined to a few sick days when I used a VPN connection to reach my office computer and keep work flowing; however, even in the office, my of my connections with colleagues were virtual as the firm was global and I was working in a space with only four colleagues. Email, phone, IM, and cloud were our usual connections with the rest of the company. June 4, I was downsized. June 5, a former colleague hired me as a consultant and I began three months of working from home (technical editing and desktop publishing). I’m a convert. The freedom to work on a project at any hour and without the inevitable distractions of an office coupled with the sheer pleasure of enjoying my home during hours when it is usually empty have most certainly improved my productivity. Day one, I downloaded a simple time-tracking system for recording hours spent on projects and quickly began using it to track personal time as well. Although I’m going back to a full-time position on September 4 in an office, I can see that as I approach retirement age, the alternative of working from home on my own schedule if a viable and very enticing option.

Karen_T's picture
Karen_T - Aug 23, 2012

I used to work for a large, well-known global corporation, and they piloted a work from home program that was so successful that the business unit I worked for sent approximately 75% of the staff (who wanted to do so) to work from a home-based office. It was wildly successful, and we saw productivity and employee satisfaction increase dramatically. There were some positions we could not allow to work from home because of intensive paperwork, handling of physical mail, etc., but overall, if there was a way to transition the work to a home-based environment, we made it happen. It required different communication strategies, and we made sure that we had metrics in place to measure performance. We did have some managers who had trouble giving up that control, but after a while, even those individuals realized how much better our environment was and that there was not that need for such tight control if you were communicating the right way, showing your employees that you trusted them, and held them accountable for their own actions in addition to taking accountability ourselves. It truly was amazing the difference we saw. I enjoyed leading teams that worked from home, and I loved seeing the improvement in their productivity and in their ultimate job satisfaction. I was a member of the senior management team, so I didn't work from home 100%, but I did work from home 2-3 days/week and still managed my teams effectively. Sadly, the business unit I worked for was eventually sold, and we were all laid off, so I no longer have that job, but I strive to find an organization I can work for that will allow me to work 100% from a home-based office. I have a side business that I eventually hope will help me replace my current income so I can work from home and be my own boss (anyone interested in pursuing a home-based business in the booming health & wellness industry should contact me!), but until then, I too am in search of an alternative to the traditional office environment. I know they exist, and I'd love to have a job like that once again!

SteveD's picture
SteveD - Aug 24, 2012

Hi Karen, what do you have in mind for a home based business in health & wellness? I'm in healthcare sales now so it would be an easy transition.

Angie W's picture
Angie W - Aug 23, 2012

It is unfortunate that many employers are not willing to treat their employees like adults. I was allowed to work from home 2 days a week in a previous job and could get more done in one day at home than I could in 3 days in the office. In addition to an employee being more productive it saves on required office space and is environmentally friendly. I wish more companies would consider this option. I would love a job where I could work from home full time.

Linda Pryor's picture
Linda Pryor - Aug 23, 2012

Angie,

I 100% agree with you on this matter. I have 25 years experience in medical billing/collections and Customer Service and worked at home for a year and a half, got more done at home in one day then I did working in the office 5 days a week. More relaxed enviorment & no distractions. If you find anything I can do from home please feel free to contact me.

Karen_T's picture
Karen_T - Aug 23, 2012

I don't know if you are interested in building your own home-based business or not, but I'd love to speak with you if that's something that interests you. I also love the idea of having the flexibility of working from home, and I am working to build a business in the health and wellness industry that will provide ultimate flexibility and a lifetime of residual income. I am always looking for individuals who have the same desire to work from home and have a well-balanced life.

SteveD's picture
SteveD - Aug 27, 2012

Karen, I would like to talk with you more about this. Please contact me via email at supersteve88 (@yahoo.com , cheesy I know but simple to remember). Thanks.

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