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The Demand for Variety: A Household Production Perspective

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  • Reuben Gronau
  • Daniel S. Hamermesh

Abstract

Product diversity pervades every modern marketplace, and economists have devoted substantial attention to firms' decisions about the supply of variety. This study looks at the consumer's side by discussing the demand for variety. Using the framework of the home-production model, we trace differences in demand to differences in the opportunity costs of various activities. The cost differences are associated with investments in human capital; and the resulting differences in schooling attainment produce differences in time costs that in turn alter the kinds and variety of activities in which household members engage. Using time-budget surveys from Australia, Israel, the Netherlands, Sweden, the United States and West Germany from between 1985 and 1994, we find substantial differences among households in the extent of variety in the nonwork activities that they produce. More educated individuals generate more variety, engaging in both additional activities and the same ones as the less educated, with most of the effect of education on the variety of nonroutine activities. There is more variety on weekends; women engage in more different activities than men; young children add to variety in household consumption/production, especially among women; and income effects are clearly positive.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8509.

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Date of creation: Oct 2001
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Publication status: published as Review of Economics and Statistics, 2008, 90 (3), 562-572
Handle: RePEc:nbr:nberwo:8509

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  1. Biddle, Jeff E & Hamermesh, Daniel S, 1990. "Sleep and the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 922-43, October.
  2. Daniel S. Hamermesh & Jungmin Lee, 2003. "Stressed Out on Four Continents: Time Crunch or Yuppie Kvetch?," NBER Working Papers 10186, National Bureau of Economic Research, Inc.
  3. Reuben Gronau & R. Layard, . "Home Production - A Survey," University of Chicago - Population Research Center 85-2, Chicago - Population Research Center.
  4. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
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  7. Kooreman, P. & Kapteyn, A.J., 1987. "A disaggregrated analysis of the allocation of time within the household," Open Access publications from Tilburg University urn:nbn:nl:ui:12-364357, Tilburg University.
  8. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-91, October.
  9. 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.
  10. 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.
  11. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  12. 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.
  13. Hamermesh, Daniel S. & Gronau, Reuben, 2007. "The Demand for Variety: A Household Production Perspective," IZA Discussion Papers 2767, Institute for the Study of Labor (IZA).
  14. 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.
  15. 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.
  16. Daniel S. Hamermesh, 2002. "Timing, togetherness and time windfalls," Journal of Population Economics, Springer, vol. 15(4), pages 601-623.
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