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 and Kelvin Lancaster in the mid 1960s.
Example
A simple example of this is baking a cake. The consumer purchases flour, eggs, and sugar and then uses some labor and time in consuming to produce a cake. The consumer did not really want the flour or sugar but purchased them to produce the cake consumed.
Formal models
See also
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. (HUP descr.)
- Gary S. Becker (1987). "family," The New Palgrave: A Dictionary of Economics, v. 2, pp. 281-86.
- Richard A. Berk (1987). "household production," The New Palgrave: A Dictionary of Economics, New York, Stockton, v. 2, pp. 673-75
- 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), pp. 197-205.
- _____ (2008). "household production and public goods," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
- Theodore W. Schultz, ed. (1974). Economics of the Family: Marriage, Children, and Human Capital, Chicago, University of Chicago Press
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