CONSUMER RESPONSE TO INFLATION IN TIME ALLOCATION DECISIONS

CLAUDIA BETH HAYNES, Purdue University

Abstract

The purpose of the study was to identify changes which consumers make in time allocated to market and non-market work in response to inflation. Analysis was limited to a period in which a declining real value of earnings existed. Prior research concerning consumer response to inflation dealt primarily with changes in income allocation, such as changes in the mix of goods purchased. Previous time allocation research focused upon basic time allocation decisions, and not upon changes in household time allocation. For analysis consumer responses to inflation were classified into three alternatives: changes in income allocation, increases in market work time and increases in non-market work time. Becker's theory of time allocation (1965) was the basis of the analytical framework. The framework suggested that the alternative of increasing non-market work time would allow the consumer to maintain a higher income constraint than possible with the remaining alternatives discussed. Data was obtained by a mail survey sent to a cross-section of Indiana households during 1980. Results indicated that Indiana consumers increased market work hours by 1.8 percent and non-market work hours by 3.18 percent. At least one-third of the households which increased work effort in market or non-market work also increased work effort in the other. Significant relationships were identified between changes in market and/or non-market work and changes in income allocation, household size, and the age of household members.

Degree

Ph.D.

Subject Area

Home economics

COinS