Relating Households' Final Consumption To Household Activities: Substitutability Or Complementarity Between Market And Non‐Market Production

Household non‐market production is not observed directly and therefore not known. This paper develops a methodological approach to the description of household production functions based on the assumption that household non‐market production and household final consumption (as defined in National Accounts) are interdependent. What households produce and the way they produce depends to a large extent on what they may acquire on the market. Empirical data is provided both by the French National Accounts and Household Surveys. The study presents a nomenclature of household output by type of product derived from the nomenclature of household non‐market productive activities, to which final consumption products as described in the National Accounting nomenclatures are matched. Final consumption commodities are classified according to the role they play in household non‐market productive processes, and subdivided into three categories: “substitute products” which save households from producing similar commodities in the home; “complementary products” which are not produced by households, but serve to produce other goods and services; “pure final consumption products” which are neither produced by households nor serve in any further productive process before being actually consumed in the proper sense of the term. The combination of monetary and non‐monetary indicators provides information on household modes of production and on trends of output over the past 15 years. The method is implemented here for all households, in a global approach. It may, nonetheless, be adapted and serve to study disparities among households stemming from their characteristics, or to estimate the implicit price at which household members value the use of their time; it may also be used to assess the impact of market output on the nature of household non‐market production. National Accounts supply aggregate data on household final consumption, while time budget surveys constitute the main source of information on their activities. The method used in this study consists of matching the official nomenclatures used to structure the two sets of data, each designed to describe different aspects of one and the same economic unit. To be more precise, this study attempts to establish a correspondence between the nomenclature of activities and products (N.A.P.) [1] used in the French National Accounting System and the nomenclature of activities used in the French Time Budget Survey [2]. This matching procedure aims at showing up the substitutability or complementarity effects between household non‐market production and output of the market sector.1 The assumption of interdependence between households' final consumption (as defined in National Accounts) and their non‐market production leads to a classification of commodities acquired on the market into three categories: “substitute products”, which the household purchases rather than producing them itself; “complementary products”, which the household uses in order to produce other goods; and finally, “pure final consumption products”, which households do not produce (or no longer produce) and which they neither transform nor use in any further productive process.