Life-cycle prices and production

Mark Aguiar, Erik Hurst

Research output: Contribution to journalArticlepeer-review

169 Scopus citations

Abstract

We use scanner data and time diaries to document how households substitute time for money through shopping and home production. We document substantial hetero-geneity in prices paid for identical goods for the same area and time, with older households shopping the most and paying the lowest prices. Doubling shopping frequency lowers a good's price by 7 to 10 percent. We estimate the shopper's price of time and use this series to estimate an elasticity of substitution between time and goods in home production of roughly 1.8. The observed life-cycle time allocation implies a consumption series that differs markedly from expenditures.

Original languageEnglish (US)
Pages (from-to)1533-1559
Number of pages27
JournalAmerican Economic Review
Volume97
Issue number5
DOIs
StatePublished - Dec 2007

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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