Household production function
Consumers often choose not directly from the commodities that they purchase, but from commodities they transform into goods through a household production function. It is these goods that they value. The idea was originally proposed by Gary Becker, Kelvin Lancaster, and Richard Muth in the mid-1960s.{{cite journal |first=Richard F. |last=Muth |year=1966 |title=Household Production and Consumer Demand Functions |journal=Econometrica |volume=34 |issue=3 |pages=699–708 |jstor=1909778 |doi=10.2307/1909778}} The idea was introduced simultaneously into macroeconomics in two separate papers by Jess Benhabib, Richard Rogerson, and Randall Wright (1991);{{cite journal |first1=Jess |last1=Benhabib |first2=Richard |last2=Rogerson |first3=Randall D. |last3=Wright |year=1991 |title=Homework in Macroeconomics: Household Production and Aggregate Fluctuations |journal=Journal of Political Economy |volume=99 |issue=6 |pages=1166–1187 |jstor=2937726 |doi=10.1086/261796|s2cid=153638201 |url=http://minneapolisfed.org/research/sr/sr135.pdf }} and Jeremy Greenwood and Zvi Hercowitz (1991).{{cite journal |first1=Jeremy |last1=Greenwood |first2=Zvi |last2=Hercowitz |year=1991 |title=The Allocation of Capital and Time over the Business Cycle |journal=Journal of Political Economy |volume=99 |issue=6 |pages=1188–1214 |jstor=2937727 |doi=10.1086/261797|citeseerx=10.1.1.156.835 |s2cid=8466708 }} Household production theory has been used to explain the rise in married female labor-force participation over the course of the 20th century, as the result of labor-saving appliances.{{cite journal |first1=Jeremy |last1=Greenwood |first2=Ananth |last2=Seshadri |first3=Mehmet |last3=Yorukoglu |year=2005 |title=Engines of Liberation |journal=Review of Economic Studies |volume=72 |issue=1 |pages=109–133 |jstor=3700686 |doi=10.1111/0034-6527.00326}} More recently with the rise of the DIY or Maker movement household production has become more sophisticated. For example, consumers can now convert plastic wire into high-value products with inexpensive 3-D printers in their own homes.{{Cite web | url=https://finance.yahoo.com/news/using-3d-printer-print-household-203945154.html | title=3D printing your household items could save you some serious cash, study finds}}[http://www.mdpi.com/2227-7080/5/1/7 Emergence of Home Manufacturing in the Developed World: Return on Investment for Open-Source 3-D Printers]. Technologies 2017, 5(1), 7; doi:10.3390/technologies5010007
Example
A simple example of this is baking a cake. The consumer purchases flour, eggs, and sugar and then uses labor, know-how, time and other resources producing a cake. The consumer did not really want the flour, sugar, or eggs, but purchased them to produce the cake for consumption (instead of buying it, e.g., from a bakery).
See also
References
{{Reflist}}
Further reading
- {{cite book |first1=Gary S. |last1=Becker |first2=Gilbert |last2=Ghez |title=The Allocation of Time and Goods Over the Life Cycle |year=1975 |location=New York |publisher=Columbia University Press |isbn=978-0-87014-514-8 |url-access=registration |url=https://archive.org/details/allocationoftime0000ghez }}
- {{cite book |first=Gary S. |last=Becker |title=A Treatise on the Family |orig-year=1981 |edition=Enlarged |year=1991 |location=Cambridge, MA |publisher=Harvard University Press |isbn=978-0-674-90698-3 |url-access=registration |url=https://archive.org/details/treatiseonfamily00beck }} ([http://www.hup.harvard.edu/catalog/BECTRR.html HUP descr.])
- {{cite book |first=Gary S. |last=Becker |year=1987 |chapter=Family |title=The New Palgrave: A Dictionary of Economics |volume=2 |pages=281–86 |title-link=New Palgrave: A Dictionary of Economics }}
- {{cite book |first=Richard A. |last=Berk |year=1987 |chapter=Household production |title=The New Palgrave: A Dictionary of Economics |location=New York |publisher=Stockton |volume=2 |pages=673–75 |title-link=New Palgrave: A Dictionary of Economics }}
- {{cite book |first=Reuben |last=Gronau |author-link=Reuben Gronau |year=1986 |chapter=Home Production: A Survey |title=Handbook of Labor Economics |volume=1 |publisher=Elsevier |pages=273–304 |doi=10.1016/S1573-4463(86)01007-6 |isbn=9780444878564 }}
- {{cite journal |first=Reuben |last=Gronau |year=1997 |title=The Theory of Home Production: The Past Ten Years |journal=Journal of Labor Economics |volume=15 |issue=2 |pages=197–205 |jstor=2535387 |doi=10.1086/209830|s2cid=155060611 }}
- {{cite book |first=Reuben |last=Gronau |year=2008 |chapter=Household production and public goods |title=The New Palgrave Dictionary of Economics |edition=2nd |title-link=The New Palgrave Dictionary of Economics }} [http://www.dictionaryofeconomics.com/article?id=pde2008_H000164&q=Household%20production%20function%20&topicid=&result_number=1 Abstract.]
- {{cite journal |first1=Robert A. |last1=Pollak |first2=Michael L. |last2=Wachter |year=1975 |title=The Relevance of the Household Production Function and Its Implications for the Allocation of Time |journal=Journal of Political Economy |volume=83 |issue=2 |pages=255–278 |jstor=1830922 |doi=10.1086/260322|citeseerx=10.1.1.589.3887 |s2cid=32371565 }}
- {{cite book |editor-first=Theodore W. |editor-last=Schultz |year=1974 |title=Economics of the Family: Marriage, Children, and Human Capital |location=Chicago |publisher=University of Chicago Press |isbn=978-0-226-74085-0 }}
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