Household Commodity Production and Social Harassment Costs

Abstract

In a seminal article, Becker [2] suggested that consumer behavior be viewed as a process in which households produce commodities (meals, plays, and so on) by combining goods or services (food, theatre tickets, and so on) and time. Households are perceived in that model as utility-maximizing producers. In effect, Becker's model demonstrates that money prices of goods or services do not provide sufficient information to explain or predict household choice. More specifically, money prices of goods or services do not reflect the full costs of household-produced commodities because money prices exclude the costs of the household's time spent in the production of such commodities. Mincer [7] showed that, unless the costs of time are considered, the income elasticities of demand for different commodities are biased. Abbott and Ashenfelter [1] have established the theoretical conditions for household utility maximizing expenditures of income and time. Wales and Woodland [9] assumed that households maximize utility functions which include leisure and a Hicksian composite good. The budget constraint is written in terms of wage rates, the price of the composite good, nonlabor income, the total number of hours available, and the full income of the household consistent with the Becker model. Kohlhase [5] constructed simultaneous constraints in which the income and time constraints are reduced to a full income constraint under the assumption that households buy back the leisure time and commuting time of market workers at the market wage rates. And Deacon and Sonstelie [4] analyzed a natural situation in which (for a short time) motorists were faced with a choice between (a) waiting in line for gasoline or (b) not waiting and purchasing gasoline of a similar quality at a higher price. By surveying customers at one low-priced station and at two nearby high-priced stations, they were able to estimate the costs of time for people in both groups. They found that, in general, estimates of the costs of time were similar to the after-tax wages of respondents, thereby providing additional evidence that the money price does not always convey sufficient information to predict household choice.