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Full price elasticities and the value of time: A Tribute to the Beckerian model of the allocation of time

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  • François Gardes

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Axe Economie mathématique et jeux - CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This article adopts Becker's allocation of time framework to describe households' choices concerning both their monetary and time use expenditures in order to propose a new method to derive price elasticity at a micro level. Price and full income elasticities are estimated on a matching of a French Family Budget and a Time Use survey. The utility and home production functions are specified in order to allow the computation of the household's opportunity cost for time, which is shown to be smaller in average than the household's wage net of taxes. This estimate serves to value time dedicated to domestic activities and are used in the definition of full prices. The estimated price elasticities compare well with the estimates by other methods, such as Frisch's model based on independence of preferences assumptions or Hicks-Lewbel's method based on the aggregation of commodities. Finally, the model is applied to the computation of a welfare index, to the estimation of the household's labour supply and to a tentative explanation of the classic difference between cross-section and time-series estimates of income elasticities.

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  • François Gardes, 2014. "Full price elasticities and the value of time: A Tribute to the Beckerian model of the allocation of time," Post-Print halshs-00973418, HAL.
    • Handle: RePEc:hal:journl:halshs-00973418
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00973418
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    References listed on IDEAS

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    6. François Gardes & Christian Loisy, 1998. "La pauvreté selon les ménages : une évaluation subjective et indexée sur leur revenu," Économie et Statistique, Programme National Persée, vol. 308(1), pages 95-112.
    7. François Gardes & Philip Merrigan, 2002. "Individual Needs and Social Pressure : Evidence on the Easterlin Hypothesis on Canadian Repeated Cross-Sections," Working Papers 2002-53, Center for Research in Economics and Statistics.
    8. Shenggen Fan & Eric J. Wailes & Gail L. Cramer, 1995. "Household Demand in Rural China: A Two-Stage LES-AIDS Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 54-62.
    9. Olivier Bargain & Andreas Peichl, 2013. "Steady-State Labor Supply Elasticities: An International Comparison," Working Papers halshs-00805744, HAL.
    10. Nicolas Ruiz & Alain Trannoy, 2008. "Le caractère régressif des taxes indirectes : les enseignements d'un modèle de microsimulation," Économie et Statistique, Programme National Persée, vol. 413(1), pages 21-46.
    11. François Gardes & Imen Sayadi & Christophe Starzec, 2015. "Les échelles d’équivalence complètes : une estimation intégrant les dimensions monétaire et temporelle des dépenses des ménages," Revue d'économie politique, Dalloz, vol. 125(3), pages 393-414.
    12. Duncan, G.J. & Gardes, F. & Gaubert, P. & Starzec, C., 1998. "A Comparison of Consumption Models Estimated on American and Polish Panel and Pseudo-Panel Data," Papiers du Laboratoire de Microéconomie Appliquée 1998-09, Université Panthéon-Sorbonne (Paris 1).
    13. Nilton Cardoso & François Gardes, 1996. "Estimations de lois de consommation sur un pseudo-panel d'enquêtes de l'Insee ( 1979,1984,1989)," Économie et Prévision, Programme National Persée, vol. 126(5), pages 111-125.
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    Cited by:

    1. Carla Canelas & François Gardes & Silvia Salazar, 2014. "Price and Income Elasticities in LAC Countries: The Importance of Domestic Production," Post-Print halshs-01020350, HAL.
    2. De Lauretis, Simona & Ghersi, Frédéric & Cayla, Jean-Michel, 2017. "Energy consumption and activity patterns: An analysis extended to total time and energy use for French households," Applied Energy, Elsevier, vol. 206(C), pages 634-648.
    3. Carla Canelas & François Gardes & Philip Merrigan & Silvia Salazar, 2019. "Are time and money equally substitutable for all commodity groups in the household’s domestic production?," Review of Economics of the Household, Springer, vol. 17(1), pages 267-285, March.
    4. Okay Gunes & Armagan Tuna Aktuna-Gunes, 2015. "Satisfactory time use elasticities of demand and measuring well-being inequality through superposed utilities," Post-Print halshs-01161880, HAL.
    5. François Gardes, 2018. "On the value of time and human life," Post-Print halshs-01903596, HAL.
    6. Anil Alpman & François Gardes, 2016. "Welfare Analysis of the Allocation of Time During the Great Recession," Post-Print halshs-01159507, HAL.
    7. François Gardes, 2018. "On the value of time and human life," Documents de travail du Centre d'Economie de la Sorbonne 18028, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    8. Okay Gunes & Armagan Tuna Aktuna-Gunes, 2015. "Satisfactory time use elasticities of demand and measuring well-being inequality through superposed utilities," Documents de travail du Centre d'Economie de la Sorbonne 15019, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    9. Anil Alpman & François Gardes, 2016. "Welfare Analysis of the Allocation of Time During the Great Recession," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01159507, HAL.
    10. Okay Gunes & Armagan Tuna Aktuna-Gunes, 2015. "Satisfactory time use elasticities of demand and measuring well-being inequality through superposed utilities," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01161880, HAL.
    11. Anil Alpman & François Gardes, 2015. "Welfare Analysis of the Allocation of Time During the Great Recession," Documents de travail du Centre d'Economie de la Sorbonne 15012, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Mar 2016.

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