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Household production and the ealsticity of marginal utility of consumption
Örebro University, Orebro University School of Business, Örebro University, Sweden. The Swedish National Road and Transport Research Institute (VTI).
2016 (English)Report (Other academic)
Abstract [en]

Chetty (2006) developed a new method of estimating the Elasticity of Marginal Utility of Consumption (EMUC) from observed work time responses to wage changes and derived an upper bound of 2 for this parameter. Here I show that the omission of household production in Chetty’s model may lead to bias, and perform a numerical sensitivity analysis of Chetty’s results in this respect. I develop a new model that includes household production from which I derive new, unbiased EMUC formulas. I offer empirical estimates based on current evidence of the included parameters, suggesting a lower bound for EMUC of about 0.9.

Place, publisher, year, edition, pages
Stockholm: Centre for Transport Studies , 2016. , 38 p.
Series
CTS Working paper, 2016:10
Keyword [en]
Elasticity of marginal utility of consumption, Household production, Labor supply, Coefficient of relative risk aversion, Consumer behavior
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:oru:diva-50393OAI: oai:DiVA.org:oru-50393DiVA: diva2:930550
Available from: 2016-05-24 Created: 2016-05-24 Last updated: 2016-05-30Bibliographically approved

Open Access in DiVA

Household production and the ealsticity of marginal utility of consumption(1282 kB)74 downloads
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Thureson, Disa
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Orebro University School of Business, Örebro University, Sweden
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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf