Is the following quotation consistent with the theory of consumer behavior? “The yield on time spent working increases as the result of economic growth. Productivity per hour rises. This means that the time allocation which has represented

equilibrium at our previous income level is disrupted. The yield on time devoted to other activities must also be raised. We are aware that time in production becomes increasingly scarce with economic growth. What we will now claim in addition to this is that changes in the use of time will occur, so that the yield on time in all other activities is brought into parity with the yield on working time. In other words, economic growth entails a general increase in the scarcity of time.” (From: Staff an Tinder, The Harried Leisure Class)

Please provide the best answer for the statement.

Since relative scarcity is measured by relative prices, this quote does seem consistent with the theory of consumer behavior. In other words, as productivity per hour and therefore wage rates rise, the value or utility of each production hour rises. In essence, this makes each hour of leisure more expensive, so that to “purchase” leisure (by working fewer hours) one must raise the marginal utility of leisure. In the theory of consumer behavior, the outcome should be such that the utility maximizing rule holds, where the marginal utility of labor relative to its “price” is equated to the marginal utility of every other consumer purchase relative to its price. Here the price of leisure rose relative to the prices of other things, so the marginal utility of leisure must also rise if everything else remains unchanged.