ABSTRACT
Ian Steedman’s recent book on consumption and time has pointed out that, despite the early recognition by Gossen of the fact that consumption requires time, the theory of the consumer has almost entirely assumed away the issue. Steedman’s book has also developed a series of simple, elegant and insightful models to examine the implications of the fact that it takes time to consume, and to show how some basic implications of consumer theory have to be altered by taking account of this simple fact. This chapter follows Steedman’s lead by pursuing some further implications of the fact that consumption takes time. It departs from Steedman in three important respects. First, unlike Steedman, who assumes that consumers fully take into account the constraints imposed by time in making their optimizing decisions, it recognizes the fact that consumers may not be completely “rational” in their choices, because they are not fully aware of the fact that it takes time to enjoy the pleasures of consumption, and they may therefore choose suboptimal consumption bundles. Second, while Steedman assumes that consumption generally requires time, it takes into account the fact that not all types of consumption take time in the same way (some goods may take up little or no time), and examines the implications of this fact for consumption decisions. Finally, while Steedman’s focus is on the behavioral implications of taking consumption time into account, this chapter focuses on its implications for the utility or happiness of the consumer. A substantial body of evidence has been produced to show that despite significant increases in consumption and income, the level of experienced utility or happiness, as reported by the consumer, has in fact not increased in many rich countries, and the same appears to be generally true across countries if we concentrate on rich countries (see Easterlin, 1995, 2000, Frey and Stutzer, 2002, Layard, 2005). There has been some analysis of the implications of the fact that consumption takes time for happiness. The pioneering contribution is that of Linder (1970) who argues that economic growth leads to a scarcity of time, which gives consumers less time for consumption and thus makes them “harried”. Linder’s book contains some simple models of consumption behavior
in which it is assumed that consumption takes time, but does not explicitly analyze the consumption-happiness relationship. Most of the discussion on consumption and happiness, however, relates to factors other than consumption time, such as the role of advertising, relative consumption and status, and consumer debt (see Schor, 1998, Frank, 1999). The rest of this chapter proceeds as follows. First, I consider a one-commodity case to show that although consumption time can explain why increases in consumption may not make people happier, it requires a form of consumer irrationality. I also explore to what extent consumers can be irrational in this sense. Second, I consider a two-commodity case to argue that the shortage of time may imply that even fully rational consumers may be no happier when they consume more, because they purchase goods which, while requiring less time to consume, fail to increase happiness in the long run. Third, I discuss some other considerations relevant to the analysis of consumption time. This is followed by my conclusion.
