Thursday, January 17, 2008

 

The Simple Life. Something worth thinking about are the transactions costs of daily life. Should we make, or buy? Coase (1937) pointed out the importance of this choice. If we make it ourselves, we avoid transactions cost, which are especially onerous if we have to think about the transaction each time. If we buy, we get better division of labor-- in the household, or the firm. Have people thought about this in the context of the household? (surely! both are Old Chicago favorites). Hiring a nanny means determining quality, doing tax forms, etc. It is simpler for the mother not to work. Hiring a plumber is a hassle too. Simpler for father to spend twice as long as the plumber would and do it.

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