Time as a direct source of utility: the case of price information search for groceries.

Time as a Direct Source of Utility: The Case of Price Information Search for Groceries Dual earner households face increased demands on their time due to labor market activity. These households may choose to engage less in time intensive household activities such as price information search for grocery items. Evidence indicates, however, that working wives do use price information search strategies (Kaitz 1979; Hacklander 1978; Harris and Stevenson 1983). In order to explain the variation in time spent in price information search by dual earner households, a model is formulated that integrates household production theory, the economics of information, and the assertion that time may yield utility directly. In the model, engaging in search increases both income and satisfaction. The resulting "joint production" model of price information search is an extension of the traditional household production and search models that provides more information and insight into the search behavior of dual earners. The possibility that enjoyment of time may affect time spent in an activity has been suggested in the literature but has not been formally modeled (Wilkie and Dickson 1980; Dow and Juster 1980). Economic studies that examined the demand for search time, but did not consider the utility value of time, found that increases in the price of a woman's time may increase or decrease time spent in search for grocery items. Search may also be a normal good (Carlson and Geiseke 1983). Although inconclusive, these studies have provided insight into taste and productivity shifters and family characteristics that may affect the amount of time spent in search. These include educational attainment, age of shopper, sex of shopper, and presence of children (Doti and Sharir 1981; Carlson and Geiseke 1983; Harris and Stevenson 1984). This research is summarized in Table 1. (1) In addition, relationships have been found between time use and ownership of durables (Strober and Weinberg 1980; Bryant 1988). A JOINT PRODUCTION MODEL OF PRICE INFORMATION SEARCH Two frameworks are useful when examining the relationships among increases in dual earner households, enjoyment of search time, and time spent in searching for lower prices. Household production theory outlines how goods and time can be combined to produce commodities that yield satisfaction (Becker 1965). Three categories of time use are leisure, household production, and market work (Gronau 1977). The economics of information asserts that consumers search for lower prices by utilizing time and purchased inputs, such as food advertisements in newspapers, to locate lower food prices (Stigler 1961). Search results in increased purchasing power that is equivalent to an increase in money income. Time is a major input into producing price information, and its effectiveness may vary across households with differential costs of time. A "joint production" model that uses a household production framework and includes search time as a direct source of utility can be illustrated by imposing weak separability on a utility function and focusing on two home-produced goods: meals and price information. The following Lagrangian function is used to maximize a utility function where home-produced meals, search time, and a composite category of other home-produced goods yield satisfaction: L = {Go(Xo,Ho;k),Gp(Xp,Hp),Hs;P} + [lambda]{w(H-Hp-Ho-Hs) + v - Po(Xs,Hs;PD)Xo - PpXp - PsXs} (1) where: U = total utility, Go = meals produced with goods and time, Xo = direct inputs used producing Go, Ho = time inputs used producing Go, k = a vector of productivity shifters, Gp = other home-produced goods, Xp = direct inputs used producing Gp, Hp = time inputs used producing Gp, Hs = time spent in price information search, P = a vector of preference shifters, w = the market wage rate of the major shopper, H = total available time, v = total nonwage income, Po = price of direct inputs used in meal production, Xs = purchased inputs used in price information search, Pp = price of purchased inputs used in home production, Ps = price of purchased inputs used in price information search, and PD = price dispersion. …