The Demand for Variety: A Household Production Perspective
by Daniel S. Hamermesh, Reuben Gronau
(April 2007)
published in: Review of Economics and Statistics, 2008, 90 (3), 562-572

Economists have devoted substantial attention to firmsí supply of variety, but little to consumersí demand for variety. Employing the framework of home production, we trace differences in demand to differences in the opportunity costs of activities, which are associated with investments in human capital. Schooling alters time costs and changes the variety of activities household members choose. In time budgets from Australia, Israel, and West Germany we find that higher own and spousesí incomes raise variety (suggesting positive income effects). Education increases variety independent of income and earnings; part of its impact goes beyond a correlation of educational attainment with preferences for variety.
Text: See Discussion Paper No. 2767