IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v17y2017i4p25n6.html
   My bibliography  Save this article

Household Production and the Elasticity of Marginal Utility of Consumption

Author

Listed:
  • Asplund Disa

    (Division of Transport Economics, The Swedish National Road and Transport Research Institute (VTI), VTI, Teknikringen 10, SE-102 15Stockholm, Sweden)

Abstract

The popular approach to estimating the elasticity of marginal utility of consumption (EMUC) (Chetty 2006, “A New Method of Estimating Risk Aversion.” American Economic Review 96 (5):1821–1834. doi:10.1257/aer.96.5.1821. http://www.aeaweb.org/articles.php?doi=10.1257/aer.96.5.1821) is here extended by including household production. It is shown that this generalization of the model is important as omission of household production may lead to bias, as demonstrated in a numerical sensitivity analysis. An extended model with household production is used to derive new EMUC formulas. Empirical estimates based on current evidence of the included parameters suggest a lower bound for EMUC of about 0.9.

Suggested Citation

  • Asplund Disa, 2017. "Household Production and the Elasticity of Marginal Utility of Consumption," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-25, October.
    • Handle: RePEc:bpj:bejeap:v:17:y:2017:i:4:p:25:n:6
    DOI: 10.1515/bejeap-2016-0265
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2016-0265
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2016-0265?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vandenbroucke, Guillaume, 2009. "Trends in hours: The U.S. from 1900 to 1950," Journal of Economic Dynamics and Control, Elsevier, vol. 33(1), pages 237-249, January.
    2. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-1187, December.
    3. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, September.
    4. Mark Aguiar & Erik Hurst, 2007. "Measuring Trends in Leisure: The Allocation of Time Over Five Decades," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(3), pages 969-1006.
    5. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    6. David J. Evans, 2005. "The elasticity of marginal utility of consumption: estimates for 20 OECD countries," Fiscal Studies, Institute for Fiscal Studies, vol. 26(2), pages 197-224, June.
    7. Apps, Patricia F & Rees, Ray, 1997. "Collective Labor Supply and Household Production," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 178-190, February.
    8. Brian Burgoon & Phineas Baxandall, 2004. "Three Worlds of Working Time: The Partisan and Welfare Politics of Work Hours in Industrialized Countries," Politics & Society, , vol. 32(4), pages 439-473, December.
    9. John Pencavel, 2015. "The Productivity of Working Hours," Economic Journal, Royal Economic Society, vol. 125(589), pages 2052-2076, December.
    10. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-799, July.
    11. Giuseppe Di Vita, 2012. "Endogenous discount rate and elasticity of the marginal utility of consumption," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 665-669, May.
    12. Michiel Evers & Ruud Mooij & Daniel Vuuren, 2008. "The Wage Elasticity of Labour Supply: A Synthesis of Empirical Estimates," De Economist, Springer, vol. 156(1), pages 25-43, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vinod Mishra & Russell Smyth, 2012. "Work Hours in Chinese Enterprises: Evidence From Matched Employer-Employee Data," Monash Economics Working Papers 10-12, Monash University, Department of Economics.
    2. Fuchs-Schündeln, Nicola & Bick, Alexander & Lagakos, David & Tsujiyama, Hitoshi, 2019. "Why are Average Hours Worked Lower in Richer Countries?," CEPR Discussion Papers 14180, C.E.P.R. Discussion Papers.
    3. Benjamin Bridgman, 2016. "Engines of Leisure," BEA Working Papers 0137, Bureau of Economic Analysis.
    4. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    5. Doepke, M. & Tertilt, M., 2016. "Families in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1789-1891, Elsevier.
    6. Daniel S. Hamermesh & Stephen Donald, 2007. "The Time and Timing Costs of Market Work," NBER Working Papers 13127, National Bureau of Economic Research, Inc.
    7. Olivier Bargain & Andreas Peichl, 2013. "Steady-State Labor Supply Elasticities: An International Comparison," AMSE Working Papers 1322, Aix-Marseille School of Economics, France.
    8. Robert A. Moffitt, 2012. "The Reveral of the Employment-Population Ratio in the 2000s: Facts and Explanations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 201-264.
    9. Robert A. Moffitt, 2012. "The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations," NBER Working Papers 18520, National Bureau of Economic Research, Inc.
    10. Francesco Angelini & Luca V. Ballestra & Massimiliano Castellani, 2022. "Digital leisure and the gig economy: a two-sector model of growth," Papers 2212.02119, arXiv.org.
    11. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    12. Lei Fang & Anne Hannusch & Pedro Silos, 2020. "Bundling Time and Goods: Implications for Hours Dispersion," DETU Working Papers 2003, Department of Economics, Temple University.
    13. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    14. Olivier Bargain & Andreas Peichl, 2016. "Own-wage labor supply elasticities: variation across time and estimation methods," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-31, December.
    15. Gelber, Alexander M. & Mitchell, Joshua W., 2009. "Taxes and Time Allocation: Evidence from Single Women," MPRA Paper 19148, University Library of Munich, Germany.
    16. Thureson, Disa, 2016. "Household production and the Elasticity of Marginal Utility of Consumption," Working papers in Transport Economics 2016:10, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    17. Bargain, Olivier & Peichl, Andreas, 2013. "Steady-state labor supply elasticities: A survey," ZEW Discussion Papers 13-084, ZEW - Leibniz Centre for European Economic Research.
    18. Vega, Alejandro, 2023. "Essays on Health, Labor Market Behavior, and Economic Incentives," Umeå Economic Studies 1018, Umeå University, Department of Economics.
    19. Li, Haizheng & Zax, Jeffrey S., 2003. "Labor supply in urban China," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 795-817, December.
    20. Sandra Müllbacher & Wolfgang Nagl, 2017. "Labour supply in Austria: an assessment of recent developments and the effects of a tax reform," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(3), pages 465-486, August.

    More about this item

    Keywords

    elasticity of marginal utility of consumption; household production; labor supply; coefficient of relative risk aversion; consumer behavior;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:17:y:2017:i:4:p:25:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.