TABLE 3-1 Stylized Account for Home-Produced Meals in a Household Production Account

Inputs

Output

Family members’ time

Home-cooked meal

Food shopping

 

Meal preparation

Meal clean-up

Purchased materials

Food

Dishwashing detergent, etc.

Services from consumer durables

Stove

Refrigerator

Microwave

Dishwasher

Housing (perhaps)

comparative advantages (which are linked to personal skills and abilities), and their production technologies. Otherwise identical households in which household members have higher opportunity costs of time, typically reflected in higher market wages, will be less likely to produce commodities at home and more likely to purchase market substitutes. Transaction costs contribute to cross-household variation as well. People who live far from towns incur higher transaction costs to eat in restaurants and should, all else equal, be more likely to eat at home than those who live in town. Similarly, the transaction costs of going out for breakfast or a morning cup of coffee may be high for someone who is typically at home in the mornings, and comparatively low for lunch if the person works during the day at a location convenient to restaurants. Other characteristics of a household, such as its size, may affect the choice between home production and market alternatives. Continuing with the meals example, larger families will benefit from economies of scale in converting time spent shopping and preparing meals, together with needed ingredients, to produce home-cooked meals.

The relative bargaining power of individual members over household decisions also may influence time allocation. When married mothers increase their hours of market work, husbands may not increase their hours of nonmarket work commensurately. Widespread awareness of this pattern has contributed to a proliferation of studies of how men and women bargain over the allocation of time and responsibility, as well as money, in the household (Lundberg and Pollak, 1996).

A household’s preferences and its choice of technology generate the combination of home-produced and market-purchased commodities that make it as well off as possible. The choice of household technology can be seen in Figure 3-1,



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