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The Demand for Variety: A Household Production Perspective

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  • Reuben Gronau

    (Rosita and Esteban Herczeg Professor of Economics Emeritus, Hebrew University, and research associate, National Bureau of Economic Research)

  • Daniel S. Hamermesh

    (Edward Everett Hale Centennial Professor of Economics, University of Texas at Austin, and research associate, IZA and NBER)

Abstract

Economists have devoted substantial attention to firms' supply of variety, but little to consumers' demand for variety. Employing the framework of home production, we trace differences in demand to differences in the opportunity costs of activities, associated with investments in human capital. Schooling alters time costs and changes the variety of activities household members choose. Time budgets from Australia, Israel, and West Germany show that higher own and spouses' incomes raise variety (suggesting positive income effects). Education increases variety independent of income and earnings; part of its impact goes beyond a correlation of educational attainment with preferences for variety. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 90 (2008)
Issue (Month): 3 (August)
Pages: 562-572

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Handle: RePEc:tpr:restat:v:90:y:2008:i:3:p:562-572

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  1. Jeff Grogger, 1997. "Market Wages and Youth Crime," NBER Working Papers 5983, National Bureau of Economic Research, Inc.
  2. Reuben Gronau & Daniel S. Hamermesh, 2008. "The Demand for Variety: A Household Production Perspective," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 562-572, August.
  3. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  4. Hamermesh, Daniel S., 2000. "Timing, Togetherness and Time Windfalls," IZA Discussion Papers 173, Institute for the Study of Labor (IZA).
  5. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 345-68, July.
  6. Jeff E. Biddle & Daniel S. Hamermesh, 1989. "Sleep and the Allocation of Time," NBER Working Papers 2988, National Bureau of Economic Research, Inc.
  7. Jay Stewart, 2006. "Assessing alternative dissimilarity indexes for comparing activity profiles," electronic International Journal of Time Use Research, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)) and The International Association for Time Use Research (IATUR), vol. 3(1), pages 49-59, August.
  8. Salop, Steven, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 393-406, October.
  9. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  10. Daniel S. Hamermesh & Jungmin Lee, 2007. "Stressed Out on Four Continents: Time Crunch or Yuppie Kvetch?," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 374-383, May.
  11. Jackson, Laurence Fraser, 1984. "Hierarchic Demand and the Engel Curve for Variety," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 8-15, February.
  12. Kooreman, P. & Kapteyn, A.J., 1984. "A disaggregated analysis of the allocation of time within the household," Research Memorandum 153, Tilburg University, Faculty of Economics and Business Administration.
  13. Michael, Robert T, 1973. "Education in Nonmarket Production," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 306-27, Part I, M.
  14. Dan Devroye & Richard B. Freeman, 2001. "Does Inequality in Skills Explain Inequality in Earnings Across Advanced Countries?," NBER Working Papers 8140, National Bureau of Economic Research, Inc.
  15. Gronau, Reuben, 1987. "Home production -- A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 4, pages 273-304 Elsevier.
  16. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1, July.
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