Holiday parties are a time for conspicuous production: "Would you like some bread with sun-dried tomatoes - I just baked it this afternoon? The tomatoes? Oh, they're nothing - I had stacks of them in my garden this year, so I dried them in the solar-powered food drier that I built last summer."
It wasn't always this way. In grade 4, my best friend Suzanne always got Wagon Wheels in her lunch box. How I envied her. I just had boring home made cookies. Back then, prepared foods were relatively expensive, and their consumption signaled social status.
Fast forward a generation. Many middle-class families rely on two incomes to pay the mortgage, and time has become the scarce resource. Sure, I could afford to buy Wagon Wheels for my kids. I don't, because granola bars are (slightly) healthier. It wouldn't matter anyways. The new status good is a home made cookie - when time is precious, anything home made is a luxury.
It's easy enough to write down a formal economic model of conspicuous household production - just choose a model of conspicuous consumption, and change the budget constraint so that the price of a good includes the time cost as well as the money cost, and the endowment is of time not of income.
But what can one learn by doing so?
Thorstein Veblen, who coined the phrase "conspicuous consumption", believed excessive consumption was wasteful. Anti-materialism is a recurrent theme in the modern economics literature too. For example, in Eaton and Eswaran's theory, Veblen goods are like peacock feathers. Sure a peacock gets some benefit from having beautiful feathers - it signals that he is a healthy adult, hence increases his chance of getting lucky with a peahen. But if he could signal his reproductive fitness with just one feather, rather than a tailful, he could save a lot of effort.
Growing peacock feathers is like an arms race -- every bird tries to have better feathers than the next, but in the end none of them are better off as a result. Indeed, Eaton and Eswaran argue that conspicuous consumption can erode all of the benefits from productivity gains, explaining why growth in per capita GDP doesn't appear to make people happier. If one person's productivity increases, he tries to increase his status by conspicuously consuming more. But one person's relative status gain is another person's loss. To recoup their social position, they too spend more on conspicuous consumption. In the end, no one is any better off.
Indeed, sociological analyses have argued that 20th century improvements in household technology - irons, washing machines, vacuum cleaners, etc - were accompanied by increases in standards of household work, so the total amount of time spent on household work stayed the same. For example, Ruth Cowan, describing the 1920s, writes:
The average housewife had fewer children than her mother had had, but she was expected to do things for her children that her mother would never have dreamed of doing: to prepare their special infant formulas, sterilize their bottles, weigh them every day, see to it that they ate nutritionally balanced meals, keep them isolated and confined when they had even the slightest illness, consult with their teachers frequently, and chauffeur them to dancing lessons, music lessons, and evening parties.
Ruth Cowan's words will have resonance for any parent who has experienced the intensely competitive world of elementary school dioramas and Halloween costumes, to say nothing of figure skating or competitive hockey.
Yet - and perhaps this is just me trying to justify the hours I spent baking this holiday - home production isn't just peacock feathers. Home-made bread with home-grown, home-dried tomatoes really is delicious.
Frank's theory of positional goods captures the idea that conspicuously consumed items can have some intrinsic value. In his model, there are two goods. A person's consumption of good x (a car, a house, say) can be observed by others; consumption of good y is unobservable. Because people get utility from the relative size of their house/car/etc, they allocate more resources to good x than they otherwise would do. Yet this collective keeping up with the Jones, just as in the Eaton and Eswaran model, makes people worse off.
Frank argues that, in general, positional concerns result in to excessive consumption, as I've noted elsewhere. Yet, interestingly, he suggests that when it comes to child-rearing, positional concerns might be a good thing - or, at least, that they are likely to be favoured by natural selection:
Suppose we take as a working hypothesis that a parent's utility function is programmed with an instruction something like, "Feel bad whenever your children are less well provided for than are the children of your peers."
Or, for modern parents, "feel bad whenever your children receive fewer/lower quality music lessons than do the children of your peers."
This is a valuable insight: when it comes to care, conspicuous production is not necessarily a bad thing.
Frank's model also suggests that the observability of consumption (or production) is crucial. That explains why the lavishly home-produced treats come out at parties and celebrations - that person making home-made bread today may be ordering in pizza for a private, unobserved family dinner tomorrow, when no social status is at stake. For readers of Canadian writers such as L.M. Montgomery, however, that should come as no surprise - women being judged by the time by which their laundry is hung out to dry (earlier=better) is a familiar theme in these novels.
However, although the conspicuous consumption models are a useful starting place for thinking about conspicuous production, there are elements of conspicuous production that aren't captured by those models.
One is the emotional aspect. This holiday, when someone told me "your cheese straws taste just like the ones my mother used to make," I glowed inside. And I still feel shame about the time when hours of parental assistance produced a diorama so bad that the only nice thing my son's teacher could say about it was "I can see that you made it all by yourself." A Cartier watch signals ability indirectly - I am skilled enough to earn enough to afford this. Home production signals ability much more directly - hence failing to produce adequately hurts.
Conspicuous production doesn't completely explain why people produce goods themselves. Home-made is still, sometimes, cheaper. As Nick Rowe has argued, a job well done can be a source of satisfaction. And sometimes there is simply no alternative. For example, when I lived in England, canned pumpkin was unobtainable, so the only way to make pumpkin pie was really from scratch, that is, starting with pumpkins (or, strictly speaking, squash, as pie pumpkins were unobtainable also).
But those were such good pies...