Gray Stanley Becker The Allocation Of Time

We have seen something of the emphasis which Becker places on the value of time in his analysis of economic behaviour. This concern led to an important article which generalised the question of time allocation and simultaneously provided a basis for the reformulation of standard consumer theory (Becker, 1965).

Before Becker, the established way to deal with time in the context of consumer theory was to concentrate on a simple dichotomy between work and leisure. Work meant paid work in the labour market, by means of which individuals were able to obtain market-produced goods and services, which were the objectives of economic activity. In this context, leisure clearly has an opportunity cost, the goods and services foregone by not working. If individuals choose not to work all the hours they could, this must be because leisure itself is a 'good', some of which is consumed in preference to other goods. Thus leisure can be incorporated into standard analysis very easily, and from the time spent on leisure, we can deduce its complement, the time spent working. Thus the supply of labour is linked to the demand for goods.

Becker however takes the view that time has more than two uses. Certainly, as in the traditional approach, time can be used in the labour market. It can also, however, be used in many types of non-paid work (housework, do-it-yourself etc.). Furthermore all consumption takes time too. He suggests therefore that we abandon leisure as a separate category: all 'leisure' involves some 'consumption' and all 'consumption' involves some 'leisure'. Instead of a choice between consumer goods and leisure, the relevant choice is taken to be that between various 'consumption activities' which use different combinations of market-produced goods and services (which have to be purchased with funds largely acquired through the sale of labour time in the market) and time spent in 'household production'.

Becker argues that instead of a choice between paid work and leisure we should analyse a choice between 'high time' activities (like a home-prepared meal) and 'low time' activities (like the purchase and consumption of a hamburger). The choice set is ultimately constrained by the limited time we have available, and the productivity of this time in its various uses. If all our available time were to be allocated to paid work, the value of the time in this use is termed (on Friedman's suggestion) 'full income'. Some of the 'full income', however, will normally be used for consumption and domestic production, using as complementary inputs in the domestic production process goods which are purchased with the proceeds of paid work.

All the predictions obtained from the standard theory can be obtained in this framework as well; for instance changes in the wage rate alter the slope of the full income budget constraint, while increases in non-work income shift the constraint outwards - in each case we would expect the allocation of time to be affected whether we apply the Becker analysis or the tradi­tional approach. But in addition Becker's method allows further influences to be incorporated. Thus changes in the technology of household production - the development of labour-saving gadgets -economises on time spent in domestic work. People buy more gadgets and 'spend' less time on housework; the gadgets can of course be purchased by 'spending' some of the time saved working in the labour market. The relevance of this analysis to such phenomena as the rising labour-force participation of married women should be clear. Similarly transport improve­ments economise on time and can be expected to affect labour supply. The approach also has the incidental benefit of providing a theoretical basis for the classification of goods as substitutes or complements: when goods are no longer seen as the final sources of utility but rather as inputs in a household production process, it is rather easier to see why the consumption of certain commodities is linked.