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Household production function


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.[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]


  • Example 1
  • Formal models 2
  • See also 3
  • References 4
  • Further reading 5


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

Formal models

See also


  1. ^ Muth, Richard F. (1966). "Household Production and Consumer Demand Functions".  
  2. ^ Benhabib, Jess; Rogerson, Richard; Wright, Randall D. (1991). "Homework in Macroeconomics: Household Production and Aggregate Fluctuations".  
  3. ^ Greenwood, Jeremy; Hercowitz, Zvi (1991). "The Allocation of Capital and Time over the Business Cycle". Journal of Political Economy 99 (6): 1188–1214.  

Further reading

  • Becker, Gary S.; Ghez, Gilbert (1975). The Allocation of Time and Goods Over the Life Cycle. New York: Columbia University Press.  
  • Becker, Gary S. (1991) [1981]. A Treatise on the Family (Enlarged ed.). Cambridge, MA: Harvard University Press. (HUP descr.)  
  • Becker, Gary S. (1987). "Family". The  
  • Berk, Richard A. (1987). "Household production". The  
  • Gronau, Reuben (1997). "The Theory of Home Production: The Past Ten Years".  
  • Gronau, Reuben (2008). "Household production and public goods". Abstract.  
  • Pollak, Robert A.; Wachter, Michael L. (1975). "The Relevance of the Household Production Function and Its Implications for the Allocation of Time".  
  • Schultz, Theodore W., ed. (1974). Economics of the Family: Marriage, Children, and Human Capital. Chicago: University of Chicago Press.  

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