Household production function explained

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.^[1] The idea was introduced simultaneously into macroeconomics in two separate papers by Jess Benhabib, Richard Rogerson, and Randall Wright (1991);^[2] and Jeremy Greenwood and Zvi Hercowitz (1991).^[3] 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.^[4] 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.^{[5] [6]}

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

• Family economics
• New Home Economics

Further reading

• Book: Gary S. . Becker . Gilbert . Ghez . The Allocation of Time and Goods Over the Life Cycle . 1975 . New York . Columbia University Press . 978-0-87014-514-8 . registration .
• Book: Becker, Gary S. . A Treatise on the Family . 1981 . Enlarged . 1991 . Cambridge, MA . Harvard University Press . 978-0-674-90698-3 . registration . (HUP descr.)
• Book: Becker, Gary S. . 1987 . Family . The New Palgrave: A Dictionary of Economics . 2 . 281–86 . New Palgrave: A Dictionary of Economics .
• Book: Berk, Richard A. . 1987 . Household production . The New Palgrave: A Dictionary of Economics . New York . Stockton . 2 . 673–75 . New Palgrave: A Dictionary of Economics .
• Book: Gronau, Reuben . Reuben Gronau . 1986 . Home Production: A Survey . Handbook of Labor Economics . 1 . Elsevier . 273–304 . 10.1016/S1573-4463(86)01007-6 . 9780444878564 .
• Reuben . Gronau . 1997 . The Theory of Home Production: The Past Ten Years . . 15 . 2 . 197–205 . 2535387 . 10.1086/209830. 155060611 .
• Book: Gronau, Reuben . 2008 . Household production and public goods . The New Palgrave Dictionary of Economics . 2nd . The New Palgrave Dictionary of Economics . Abstract.
• Robert A. . Pollak . Michael L. . Wachter . 1975 . The Relevance of the Household Production Function and Its Implications for the Allocation of Time . . 83 . 2 . 255–278 . 1830922 . 10.1086/260322. 10.1.1.589.3887 . 32371565 .
• Book: Theodore W. . Schultz . 1974 . Economics of the Family: Marriage, Children, and Human Capital . Chicago . University of Chicago Press . 978-0-226-74085-0 .

Notes and References

1. Richard F. . Muth . 1966 . Household Production and Consumer Demand Functions . . 34 . 3 . 699–708 . 1909778 . 10.2307/1909778.
2. Jess . Benhabib . Richard . Rogerson . Randall D. . Wright . 1991 . Homework in Macroeconomics: Household Production and Aggregate Fluctuations . . 99 . 6 . 1166–1187 . 2937726 . 10.1086/261796. 153638201 .
3. Jeremy . Greenwood . Zvi . Hercowitz . 1991 . The Allocation of Capital and Time over the Business Cycle . Journal of Political Economy . 99 . 6 . 1188–1214 . 2937727 . 10.1086/261797. 10.1.1.156.835 . 8466708 .
4. Jeremy . Greenwood . Ananth . Seshadri . Mehmet . Yorukoglu . 2005 . Engines of Liberation . . 72 . 1 . 109–133 . 3700686 . 10.1111/0034-6527.00326.
5. Web site: 3D printing your household items could save you some serious cash, study finds.
6. 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