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American Economic Review: Vol. 97 No. 5 (December 2007)
AER Volume. 97, Issue 5 | Next Article
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AER Forthcoming Articles
Life-Cycle Prices and Production
Article Citation
Aguiar, Mark, and
Erik Hurst. 2007. "Life-Cycle Prices and Production."
American Economic Review,
97(5): 1533-1559.
DOI: 10.1257/aer.97.5.1533
DOI: 10.1257/aer.97.5.1533
Abstract
We use scanner data and time diaries to document how households substitute time
for money through shopping and home production. We document substantial heterogeneity
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. (JEL D12, D91)
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Authors
Aguiar, Mark (University of Rochester)
Hurst, Erik (University of Chicago)
Hurst, Erik (University of Chicago)
JEL Classifications
D12: Consumer Economics: Empirical Analysis
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
