Contributions to Family and Household Economics - Literature review Example

Economic theory in leisure and sport activities is best explained by the economic approach put forward by Gary S. Becker, an American economist. The foundational assumptions of Becker's economic approach to the family, maximizing behavior and equilibrium, as well as primary auxiliary assumptions as household production and interdependent preferences, are applicable to the allocation of time for leisure and sport services by family members. (Becker 1965). Becker (1976) presented the three foundational assumptions of the economic approach as "maximizing behavior, market equilibrium, and stable preferences" (p. 5). In the preface to his work, A Treatise on the Family, Becker wrote: "The economic approach ... assumes that individuals maximize their utility from basic preferences that do not change rapidly over time, and that the behavior of different individuals is coordinated by explicit and implicit markets" (1981, p. ix). He discussed, "This volume uses the assumptions of maximizing behavior, stable preferences, and equilibrium in implicit or explicit markets to provide a systematic analysis of the family" (1981, p. ix). Becker's theory on maximizing behavior is supported by the survey results of the 2002 General Household Survey data. The results showed that men were more likely than women to have participated in an organized competition; four in ten men (40%) had done so compared with one in seven (14%) women. In addition, the women sports participants were more likely than their male counterparts to have received tuition to improve their performance in a sport, game or physical activity (45% compared with 31%).Among adults who said they would like to do a sport that they were not currently doing, 16% had not participated in a sport, game or physical activity in the twelve months before interview Becker has formulated a general theory for behavior of the family. His theory covers the allocation of time in the family and decisions regarding marriage, divorce and children. His theory explains that as real wages increase, together with the possibilities of substituting capital for labor in housework, labor is released in the household, so that it becomes more and more uneconomical to let one member of the household specialize in household production (for instance, child care). Due to this, the family's previous social and economic functions are shifted to institutions such as schools and other public agencies. Becker has argued that these processes explain the increase in married women's job participation outside the home and the rising tendency toward divorce. Becker's theory will be further explained by citing the 2002 General Household Survey (GHS) which has a set of questions about adult participation in sports, games, physical, and leisure activities. The GHS collected information from approximately 14,800 people aged 16 and over, living in private households. The amount of time spent at work has never consistently been much greater than that spent at other activities. Even a work week of fourteen hours a day for six days still leaves half the total time for sleeping, eating and other activities. Economic development has led to a large secular decline in the work week. Hence, the allocation and efficiency of non-working time may now be more important to economic welfare than that of actual working time. (Becker, 1965). However, economists pay less attention to non-working time. In the 2002 GHS data, it was reported in the four weeks before interview that: 99% watched TV; 88% listened to the radio; 83% listened to records/tapes; 65% read books; 11% sang or played a musical instrument either to an audience, or to rehearse for an event or for their own pleasure; 11% danced ; 9% painted or did drawing, printmaking or sculpture; 4% wrote stories, plays or poetry; 3% helped with the running of an arts/cultural event or organization on a voluntary basis; and 2% performed in a play, drama or rehearsed for a performance. The time spent at work declined secularly, partly because young persons increasingly delayed entering the labor market by lengthening their period of schooling. In recent years many economists have stressed that the time of students is one of the inputs into the educational process that this time could be used to participate more fully in the labour market and therefore that one of the costs of education is the forgone earnings of students. (Becker, 1965). For example, the cost of a service like the theatre or a good like meat is generally simply said to equal their market prices, yet everyone would agree that the theatre and dining take time, just as schooling does, time that often could have been used productively. If so, the full costs of these activities would equal the sum of market prices and the forgone value of the time used up. Indirect costs should be treated on the same footing when discussing all non-work uses of time, as they are now in discussions of schooling. Becker introduced the cost of time systematically into decisions about non-work activities. The first section sets out a basic theoretical analysis of choice that includes the cost of time on the same footing as the cost of market goods, while the remaining sections treat various empirical aspects of the theory. These include a new approach to changes in hours of work and " leisure," the full integration of so-called " productive " consumption into economic analysis. According to traditional theory, households maximize utility functions of the form U = U{yi, ya, . . ., y) (1) subject to the resource constraint 2pi'yi = I=W.-^V (2) where y< are goods purchased on the market, p'i are their prices, / is money income, W is earnings and F is other income. The main variable is the systematic incorporation of non-working time. Households will be assumed to combine time and market goods to produce more basic commodities that enter their utility functions. One such commodity is the seeing of a play, which depends on the input of actors, script, theatre and the playgoer's time; another is sleeping, which depends on the input of a bed, house (pills ) and time. The commodities are called Zt and written as Zi=fi{xi,Ti) (3) where A;i is a vector of market goods and Ti a vector of time inputs used in producing the tth commodity.^ Tt is a vector because, e.g., the hours used during the day or on weekdays may be distinguished from those used at night or on week-ends. Each dimension of Ti refers to a different aspect of time. Generally, the partial derivatives of Z< with respect to both xt and Ti are non-negative.2 Households are both producing units and utility maximizers. They combine time and market goods via the " production functions " fi to produce the basic commodities Zj, and they choose the best combination of these commodities in the conventional way by maximising a utility function U =U(Zi,... 2) s Uify,.. ./") s Uix^, ...xm; Ti,.. . r) (Becker, 1965) Production time and consumption time is retained by households as they create their own utility. The full price of consumption is the sum of direct and indirect prices in the same way that the full cost of investing in human capital is the sum of direct and indirect costs using time at consumption rather than at work. Among adults who reported they were suffering from a limiting longstanding illness or disability5, 23% said they had participated in the arts compared with 28% of adults who had not reported a limiting longstanding illness. However, there were no significant differences between participation levels in painting and writing stories/plays by whether people had a limiting longstanding illness or not.- 7% of adults aged 16 to 69 had attended a leisure or recreation class in the four weeks before interview. Women were over twice as likely as men to have reported they attended a leisure or recreation class (10% compared with 4%). Prior to Becker's work, economists value time and other resources of a household to activities geared towards earning income, paying no attention to the consumption of non-working time. Of course, all the time would not usually be spent " at " a job: sleep, food, even leisure are required for efficiency, and some time would have to be spent on these activities in order to maximize money income. The amount spent would, however, be determined solely by the effect on income and not by any effect on utility. Slaves, for example, might be permitted time " off" from work only in so far as that maximized their output. Households in richer countries forfeit money income in order to obtain additional utility, i.e., they exchange money income for a greater amount of psychic income. For example, they might increase their leisure time; take a pleasant job in preference to a better-paying unpleasant one. In these and other situations the amount of money income forfeited measures the cost of obtaining additional utility. Thus the full income approach provides a meaningful resource constraint and one firmly based on the fact that goods and time can be combined into a single overall constraint because time can be converted into goods through money income. It incorporates a unified treatment of all substitutions of non-pecuniary for pecuniary income, regardless of their nature or whether they occur on the job or in the household. Any utility received would only be an incidental by-product of the pursuit of money income. Women were more likely than men to have read books (72% compared with 58%). In general, it was found that the proportion of adults who listened to the radio or records/tapes decreased with age. In terms of adult participation in selected leisure activities over time The inextricable relationship between sport consumption and time has been featured in several studies (e.g. Cawley, 2004; Ksenne & Butzen, 1987; Humphreys & Ruseski, 2006) Gossen (1854) presented a general theory of marginal utility (Cardinal Utility Theory). Following his law, the marginal utility of goods is diminishing with its increasing consumed number. Therefore consumers' willingness to pay for a good would decrease with increasing consumed quantity of this good. The marginal utility of leisure is increasing with diminishing disposable leisure, since leisure is a good as well (Hicks, 1932). If sport consumers want to maximize utility, their willingness to spend an additional time unit should be decreasing with increasing actual time to reach the sport facility. Pawlowski, Breuer and Wicker (2007) detected that "time to reach the sport facility" is a major factor affecting sport consumption behavior since a short "time to reach the sport facility" affects the consumers' decision in favor of practicing their sport. A (1) decentralized sport facility allocation system exhibits efficiency potential by drawing a good number of sport participants. Since (2) centralization as well contains efficiency potential efficient sport facility allocation planning is a trade-off decision. To exhaust the efficiency potential of centrally allocated sport facilities, it is essential to pinpoint whether sport consumers' willingness to spend additional travel minutes is increasing, decreasing or constant with increasing actual time to reach their sport facility. Regarding sport consumption decisions, time plays an important role, since consumption activities (e.g. practicing a sport like playing tennis) are produced by means of the input of market goods (e.g. tennis shoes), human capital (e.g. knowledge of tactics,) time (e.g. time to reach the sport facility), and other inputs (e.g. team-mates) (Household Production Theory, Stigler & Becker, 1977). In "De Gustibus Non Est Disputandum," Stigler and Becker (1977) provide a powerful statement of the position that preferences are not only fixed and exogenous but also identical across individuals. For example, in the 2002 General Household Survey, three quarters of adults (75%) had taken part in a sport, game or physical activity and 59% of adults had done so in the previous four weeks. Walking (46%) was the most popular sports activity followed by swimming (35%), keep fit/ yoga - including aerobics and dance exercise (22%), cycling (19%) and cue sports3 (17%). Becker insisted on the importance of interdependent preferences. Becker introduced altruism in the context of the preferences of parents regarding their children's consumption, and then applied it to the preferences of husbands regarding their wives' consumption. With interdependent preferences, an individual's utility depends not only on his or her own consumption, but also on the consumption of others. Such dependence would arise, for example, if one spouse wants to spend leisure time with the other (e.g., seeing a play together), or if one spouse takes pleasure in the other's happiness or satisfaction. (Pollack, 2001). Among adults who reported they were suffering from a limiting longstanding illness or disability5, 23% said they had participated in the arts compared with 28% of adults who had not reported a limiting longstanding illness. However, there were no significant differences between participation levels in painting and writing stories/plays by whether people had a limiting longstanding illness or not. About 7% of adults aged 16 to 69 had attended a leisure or recreation class in the four weeks before interview. Women were over twice as likely as men to have reported they attended a leisure or recreation class (10% compared with 4%). According to Becker, altruistic preferences are best introduced by assuming that one's spouse for instance, the wife is egoistic. Suppose that the husband, Becker's altruist, cares about both his own consumption and his wife's utility. These two assumptions, one about the wife's preferences and the other about the husband's preferences, imply that the husband's preferences can be represented by a utility function of the form Uh(Y) = Wh[Yh, U*w(Yw)]. In the altruistic sense, the husband considers his wife's preferences regarding her consumption pattern. For example, Becker states that the wife who wants her husband to spend more time jogging and less time watching television is non-altruistic. For instance, in general, participation in a sport, game or physical activity decreased with age. For example, among adults in Great Britain, 62% of people living in Scotland had participated in at least one sports activity compared with 58% of adults in England and 57% of adults in Wales. Half of adults living in the South West reported they had participated in at least one sports activity compared with 37% to 46% of adults living in other regions in England. About 44% of men and 31% of women, who participated in at least one activity, had belonged to a club for the activity during that period. In 2002, the majority of respondents had watched TV (99%) and a high proportion had listened to the radio (88%), which remains unchanged since 1996; the proportion of adults who said they had listened to records or tapes has increased steadily over the last 25 years from 62% in 1977 to 83% in 2002; and between 1996 and 2002 there has been no change in the proportion of adults who read books (65%). In general, participation in the arts decreased with age but the association was less pronounced than it was for sports participation. Men and women in the youngest age group (16 to 19) were the most likely to have performed in a play, done painting, writing or to have helped with the running of an arts/cultural event or organization on a voluntary basis. Indeed, Becker's landmark work on maximizing behavior and interdependent preferences on the consumption of sports and leisure activities has enabled economists to understand the value of individuals in richer countries who forfeit money income to gain additional utility. References Books Gilbert Ghez and Gary S. Becker. (1975). The Allocation of Time and Goods over the Life Cycle (p. 1 - 45). National Bureau of Economic Research. Rickards L et al. Living in Britain: Results from the 2002 General Household Survey. Lecture Pollack, Robert A. "Gary Becker's Contributions to Family and Household Economics". Lecture at the University of Chicago on April 20, 2001 at the Phoenix Symposium in honor of Gary Becker. Journal Articles Becker, G. S. (1965). "A theory of the allocation of time." Economic Journal, 75 (299), 493-517. Becker, G. S. & Stigler, G. J. (1977). De Gustibus Non Est Disputandum. The American Economic Review, 67 (2), 76-90. Cawley, J. (2004). An economic framework for understanding physical activity and eating behaviors. American Journal of Preventive Medicine, 27(3s), 117-125. Downwards, Paul. "Exploring the Economic Choice to Participate in Sport: Results from the 2002 General Household Survey". Institute of Sport and Leisure Policy, School of Sport and Exercise Sciences, Loughborough University, Leicestershire Humphreys, B. R. & Ruseski, J. E. (2006). Economic determinants of participation in physical activity and sport (AIES, IASE Working Paper Series, 06-13). Kahneman, D. & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-291. Ksenne, S. & Butzen, P. (1987). Subsidizing sports facilities: the shadow price-elasticities of sports. Applied Economics, 19(1), 101-110. Pawlowski, T., Breuer, C. & Wicker, P. (2007). Time and space elasticities of sports demand - a contribution to efficient sports facility allocation. 15th Congress of EASM (Abstract Book), Sport Event and Sustainable Development (253-254). Read More