Leisure and Time Elements in the Consumer Behavior

Abstract

The traditional theory of consumer behavior seldom treats leisure explicitly. The importance of leisure in high income economies has been shown by increasing attention given to the economics of recreations. Hours of labor also have become a major factor in collective bargaining. In general, leisure is lumped together and considered a superior consumer good with a high income elasticity of demand. Another factor which is often neglected is the time involved in consumption of certain goods and services, whether or not they are considered items of leisure. In this paper first the traditional approach of utility theory is briefly sketched. Then a new approach to the role of leisure and the time element associated with the consumption of certain goods and services is presented. A new consumer equilibrium condition is derived. It will be shown that the existence of the work-hour regulations often implies the existence of overtime, moonlighting, and absenteeism 12, 322-331]. When the work-hour regulations are strictly enforced, we have a problem of a second best consumer equilibrium, and the optimality condition for the second best consumer equilibrium is also derived. In the last section we derive the conventional Slutsky-Hicks equations which express the impact of the price and wage changes on the consumption of various goods as well as various types of leisure in terms of the substitution and income effects. Contributions of Gilbert and Pfouts [4; 10] were the starting point of the analysis in that section. The demand functions obtain-