The Demand for Variety: A Household Production Perspective

Reuben Gronau and Daniel Hamermesh

No 8509, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Product diversity pervades every modern marketplace, and economists have devoted substantial attention to firms' decisions about the supply of variety. This study looks at the consumer's side by discussing the demand for variety. Using the framework of the home-production model, we trace differences in demand to differences in the opportunity costs of various activities. The cost differences are associated with investments in human capital; and the resulting differences in schooling attainment produce differences in time costs that in turn alter the kinds and variety of activities in which household members engage. Using time-budget surveys from Australia, Israel, the Netherlands, Sweden, the United States and West Germany from between 1985 and 1994, we find substantial differences among households in the extent of variety in the nonwork activities that they produce. More educated individuals generate more variety, engaging in both additional activities and the same ones as the less educated, with most of the effect of education on the variety of nonroutine activities. There is more variety on weekends; women engage in more different activities than men; young children add to variety in household consumption/production, especially among women; and income effects are clearly positive.

JEL-codes: D12 J22 (search for similar items in EconPapers)
Date: 2001-10
New Economics Papers: this item is included in nep-ltv
Note: LS
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Citations: View citations in EconPapers (30)

Published as Review of Economics and Statistics, 2008, 90 (3), 562-572

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Journal Article: The Demand for Variety: A Household Production Perspective (2008)
Working Paper: The Demand for Variety: A Household Production Perspective (2007)
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