“Variety of Demand Or Demand for Variety — A Household Production Perspective” by Reuben GRONAU
Daniel S. HAMERMESH
University of Texas at Austin
We construct a model of household production with setup costs that are incurred when a new activity is begun. An activity is undertaken if the surplus that its production generates exceeds these costs. Because the setup costs take time away from the direct production of commodities, the rigid time constraint becomes increasingly important relative to the softer money constraint as incomes rise. Additional schooling can improve household production technologies and help overcome the (time) setup costs. Using time-budget surveys from Australia, Israel, the Netherlands, Sweden and the United States from between 1985 and 1994, we find substantial differences among households in the variety of nonwork activities that they produce. More educated individuals generate more variety, with most of the effect of education on the variety of nonroutine activities produced. There is more variety on weekends; women engage in more different activities than men; and young children add to variety in household consumption/production, especially among women.