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. The idea was introduced simultaneously into macroeconomics in two separate papers by Jess Benhabib, Richard Rogerson and Randall Wright (1991) and Jeremy Greenwood and Zvi Hercowitz (1991).

Example

A simple example of this is baking a cake. The consumer purchases flour, eggs, and sugar and then uses some labor and time 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

• Family economics

References

• Gary S. Becker and Gilbert Ghez (1975). The Allocation of Time and Goods Over the Life Cycle. New York, Columbia University Press. ISBN 0-87014-514-2. 
• Gary S. Becker (1981, Enlarged ed., 1991). A Treatise on the Family. Cambridge, MA, Harvard University Press. ISBN 0-674-90698-5.  Check date values in: |date= (help) (HUP descr.)
• Gary S. Becker (1987). "family," The New Palgrave: A Dictionary of Economics, v. 2, pp. 281–86.
• Jess Benhabib, Richard Rogerson and Randall D. Wright (1991). "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy.
• Richard A. Berk (1987). "household production," The New Palgrave: A Dictionary of Economics, New York, Stockton, v. 2, pp. 673–75
• Jeremy Greenwood and Zvi Hercowitz (1991). "The Allocation of Capital and Time over the Business Cycle," Journal of Political Economy.
• Reuben Gronau (1986). "Home Production," Handbook of Labor Economics, v. 1. Elsevier.
• _____ (1997). "The Theory of Home Production: The Past Ten Years," Journal of Labor Economics, 15(2), p p. 197-205.
• _____ (2008). "household production and public goods," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
• Richard F. Muth (1966). "Household Production and Consumer Demand Functions", Econometrica, Vol. 34, No. 3 (Jul., 1966) (pp. 699-708)
• Robert A. Pollak and Michael L. Wachter (1975). "The Relevance of the Household Production Function and Its Implications for the Allocation of Time," Journal of Political Economy, 83(2), pp. 255-278.
• Theodore W. Schultz, ed. (1974). Economics of the Family: Marriage, Children, and Human Capital, Chicago, University of Chicago Press