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Back to Becker: Producing Consumption with Time and Goods

Author

Listed:
  • Lei Fang

    (Federal Reserve Bank of Atlanta)

  • Anne Hannusch

    (University of Mannheim)

  • Pedro Silos

    (Temple University)

Abstract

Households combine market goods and their time to produce different types of consumption activities, from which they derive utility. This paper documents that households with more education allocate more time and a higher share of expenditure to expenditure-intensive leisure activities, such as entertainment; while households with less education allocate more time on time- intensive leisure activities, such as watching TV. Employing the difference in the allocation of time and expenditures, this paper estimates a utility function with different substitutability between time and expenditure across consumption activities. Compared with a standard utility function in which time generates utility only through the form of leisure, the proposed utility function exhibits a larger response in labor supply and a smaller response in welfare inequality to wage and price changes.

Suggested Citation

  • Lei Fang & Anne Hannusch & Pedro Silos, 2019. "Back to Becker: Producing Consumption with Time and Goods," 2019 Meeting Papers 1386, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:1386
    as

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    References listed on IDEAS

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