Resource Allocation among Consumption, Labour Supply, Human Capital, Social Capital and Religious Human Capital:

Abstract

This study is an attempt to find more and diversified areas of resource allocation and the factors affecting decision making of individuals in this regard. An individual’s allocation of resources (time and money) depends on economics, social, demographic, religious and environmental variables. Study extends some earlier work to the analysis of individual’s utility maximization out of available budget of money and time by allocation into five activities namely; consumption, labor supply, human capital, social capital and religious human capital. The cost (marginal cost) of investment in human capital, social capital and religious human capital is incurred in one and the same period and returns from human capital, social capital and religious human capital are accrued in next period. All types of capital are relational to each other. The path of wage rate is determined by the variables human capital, social capital and religious human capital. Similarly behavior of time allocation to labor supply also depends on time allocation to social capital and religious activities in addition to its complementarity with time allocated to consumption. Our mathematical results imply that in equilibrium marginal returns in future from investment of time in human capital, social capital and religious human are equal. So equilibrating process imply that allocation of time between human capital, social capital and religious human capital will be readjusted until the returns from all types of capital are equalized. The study presents a social capital matrix to explain that social capital accumulates in one or more than one dimension and in different forms. Such a matrix can show how a variety of reciprocal relations, mutual exchanges and social infrastructure exists and interacts. Some of our empirical results are contrary to studies pertaining to conventional economics or the economics of religion and others support newly developed Divine Economics Framework. While some results are exclusively innovative with regards the role of religious stock as an externality to determine resource allocation. The stock of religious human capital in a household affects individual to make decision regarding resource (time and money) allocation to make investment in consumption, labor supply, human capital, social capital, and religious human capital.