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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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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," Documents de travail du Centre d'Economie de la Sorbonne 14014, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:14014
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    7. Kenneth W. Clements & Antony Selvanathan & Saroja Selvanathan, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
    8. 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.
    9. Bargain, Olivier & Peichl, Andreas, 2013. "Steady-state labor supply elasticities: A survey," ZEW Discussion Papers 13-084, ZEW - Leibniz Centre for European Economic Research.
    10. Adolf Buse, 1994. "Evaluating the Linearized Almost Ideal Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 781-793.
    11. 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.
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    13. 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).
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    Cited by:

    1. 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.
    2. 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.
    3. Carla Canelas & François Gardes & Silvia Salazar, 2014. "Price and Income Elasticities in LAC Countries: The Importance of Domestic Production," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01020350, HAL.
    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 & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Documents de travail du Centre d'Economie de la Sorbonne 17027, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    8. 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.
    9. 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.
    10. 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.
    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.
    12. François Gardes, 2019. "The Estimation of Price Elasticities and the Value of Time in a Domestic Production Framework: an Application using French Micro-Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01478052, HAL.
    13. François Gardes & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Post-Print halshs-01535172, HAL.
    14. François Gardes, 2019. "The Estimation of Price Elasticities and the Value of Time in a Domestic Production Framework: an Application using French Micro-Data," Post-Print hal-01478052, HAL.
    15. François Gardes, 2019. "The Estimation of Price Elasticities and the Value of Time in a Domestic Production Framework: an Application using French Micro-Data," PSE-Ecole d'économie de Paris (Postprint) hal-01478052, HAL.
    16. François Gardes & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01535172, HAL.
    17. Carla Canelas & François Gardes & Silvia Salazar, 2014. "Price and Income Elasticities in LAC Countries: The Importance of Domestic Production," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01020350, HAL.
    18. François Gardes, 2018. "On the value of time and human life," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01903596, HAL.
    19. 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.

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    More about this item

    Keywords

    Allocation of time; domestic production; full income; full price; opportunity cost for time; price elasticity;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D1 - Microeconomics - - Household Behavior
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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