Valuing family household production: a contingent evaluation approach

Abstract

The time of family members is often refgarded as an important input used in family household production. Unlike existing methods used in the valuation of the time spent in home production, namely the opportunity cost of time and the replacement cost method, a contingent evaluation approach is proposed here. Consistent with the way non-market goods an services are valued, the method essentially elicits people’s willingness to pay for household production whilst taking into account opportunity costs. Particular attention is also paid to the objective of valuation - whether it is for GNP accounting, matrimonial property settlements or for welfare and compensation issues - and the appropriate measures to be used - marginal, total and net valuation. Using a model of home production, these different meaures of economic value are distinguished both conceptually and in their uses. The results from a modest study of household production using the methods described here are presented. These results are then compared to those derived from other studies.