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The Demand for Variety: A Household Production Perspective

  • Reuben Gronau
  • Daniel S. Hamermesh

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
Note: LS
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  1. 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.
  2. 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.
  3. 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.
  4. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  5. 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.
  6. 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.
  7. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1, May.
  8. Jeff Grogger, 1997. "Market Wages and Youth Crime," NBER Working Papers 5983, National Bureau of Economic Research, Inc.
  9. Daniel S. Hamermesh, 2002. "Timing, togetherness and time windfalls," Journal of Population Economics, Springer, vol. 15(4), pages 601-623.
  10. Reuben Gronau & Daniel S. Hamermesh, 2001. "The Demand for Variety: A Household Production Perspective," NBER Working Papers 8509, National Bureau of Economic Research, Inc.
  11. Kooreman, P. & Kapteyn, A.J., 1984. "A disaggregated analysis of the allocation of time within the household," Research Memorandum FEW 153, Tilburg University, School of Economics and Management.
  12. 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.
  13. Jeff E. Biddle & Daniel S. Hamermesh, 1989. "Sleep and the Allocation of Time," NBER Working Papers 2988, National Bureau of Economic Research, Inc.
  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. 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.
  16. 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.
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