Consumer behavior, household production and shadow prices : applications to the allocation of time and to social interactions.

Summary Some resources cannot be traded on the market but they can be valued by virtual prices. I theoretically derive 3 types of virtual prices whose value I structurally estimate at the individual level in order to analyze their effects on the behavior and welfare of individuals. I statistically match the Consumer Expenditure and American Time Use surveys using a matching procedure that solves the weaknesses of the standard procedures. First, I estimate the shadow price of time that requires steps to estimate a utility function, which depends on time and market goods, that I use as a new welfare measure. The results show that the reallocation of time absorbed 30% of the adverse effect of the Great Recession. I then calculate the shadow price of 5 (consumer-produced) activities, such as leisure and food, to estimate the elasticities of time uses (including labor supply) and activity demand with respect to full income, the shadow price of time, the shadow price of activities, wages, and the price of market goods. The third shadow price I discuss provides the cost of underemployment/unemployment as a function of individual characteristics. This allows us to evaluate the opportunity cost of employment policies and to determine the level of unemployment benefits. Finally, I propose a reformulation of social norm theory where I analyze the determinants of disobedience to social norms . and the effect of disobedience on shadow prices, individual behavior and, finally, on growth.