Introducing Relations between Activities and Goods Consumption in Microeconomic Time Use Models

The authors present a microeconomic model for time use and consumption for workers with an improved treatment of the (technical) relations between goods and time. In addition to the traditional time and income constraints, a new set of restrictions is included as minimum consumption of goods that depend on the activities undertaken. Also an alternative model is proposed in which a new set of restrictions is included as minimum times that depend on the consumption of goods. A system of equations involving a subset of the consumer’s decision variables is obtained, including (1) work time, (2) activities that are assigned more time than the minimum, and (3) goods that are consumed above the minimum. The system cannot be solved explicitly in the endogenous decision variables but is used to set a stochastic system for econometric estimation through maximum likelihood. The model proposed in this paper is applied to analyze weekly time use and consumption data from Netherlands for year 2012. The results obtained by this new framework are compared with previous research in terms of the value of leisure and the value of work, showing substantial differences in the valuation of time.