Household behavior

In traditional microeconomics, household behavior is understood narrowly as the theory of consumer demand for commodities, i.e., household consumption. There are, however, other aspects of household behavior that have also been investigated in the microeconomics literature, such as the householdīs supply of labor, the production of commodities (mainly, services) within the household (household production), saving decisions, retirement decisions, and many more.

Consumer demand: In the theory of consumer demand, demand functions are derived for commodities by considering a model of rational choice based on utility maximization together with a description of underlying economic constraints. In the theory of consumer demand, these constraints include income (which is treated as given here while it might be endogenous in a more general model of household decisions), and commodity prices, which are also fixed from the perspective of an individual household.

See also: consumption, income, saving, life-cycle hypothesis, retirement

Literature: Pudney (1989)

Entry by: Joachim Winter

June 17, 1999
Direct questions and comments to: Glossary master