Consumers often choose not directly from the

commodities In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...

that they purchase but from commodities they transform into goods through a household

production function In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream neoclassical theories, used to define ...

. It is these goods that they value. The idea was originally proposed by

Gary Becker Gary Stanley Becker (; December 2, 1930 – May 3, 2014) was an American economist who received the 1992 Nobel Memorial Prize in Economic Sciences. He was a professor of economics and sociology at the University of Chicago, and was a leader of ...

, Kelvin Lancaster, and Richard Muth in the mid-1960s. The idea was introduced simultaneously into macroeconomics in two separate papers by

Jess Benhabib Jess Benhabib (born 9 June 1948) is a professor at New York University, and known for his contributions to growth theory and sunspot equilibria. Benhabib earned his Ph.D. from Columbia University in 1976. He started his teaching career as an ass ...

, Richard Rogerson, and Randall Wright (1991); and

Jeremy Greenwood Jeremy John Denis Greenwood CBE (born 7 September 1942) is a British ornithologist and was Director of the British Trust for Ornithology (BTO) from 1988 until he retired in September 2007. Greenwood was educated at Royal Grammar School Worce ...

and Zvi Hercowitz (1991). Household production theory has been used to explain the rise in married female labor-force participation over the course of the 20th century, as the result of labor-saving appliances. More recently with the rise of the DIY or Maker movement household production has become more sophisticated. For example, consumers can now convert plastic wire into high-value products with inexpensive 3-D printers in their own homes.Emergence of Home Manufacturing in the Developed World: Return on Investment for Open-Source 3-D Printers
''Technologies'' 2017, 5(1), 7; doi:10.3390/technologies5010007

Example

A simple example of this is baking a

cake Cake is a flour confection made from flour, sugar, and other ingredients, and is usually baked. In their oldest forms, cakes were modifications of bread, but cakes now cover a wide range of preparations that can be simple or elaborate, ...

. The consumer purchases flour, eggs, and sugar and then uses labor, know-how, time and other resources producing a cake. The consumer did not really want the flour, sugar, or eggs, but purchased them to produce the cake for consumption (instead of buying it, e.g., from a bakery).

Example

See also

References

Further reading