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Noncooperative Household Consumption with Caring

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  • Cherchye, L.J.H.
  • Demuynck, T.
  • Rock, B. de

    (Tilburg University, Center for Economic Research)

Abstract

We present a household consumption model that accounts for caring house- hold members, while allowing for noncooperative behavior in decisions on pub- lic goods. The intrahousehold consumption outcome critically depends on the degree of caring between the household members. By varying the degree of in- trahousehold caring, the model encompasses a whole continuum of household consumption models that are situated between the fully cooperative model and the noncooperative model without caring. This feature is used to define a measure for the degree of cooperation within the household. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intrahousehold transfers. Fi- nally, following a revealed preference approach, we derive testable implications of the model for empirical data. We demonstrate the practical usefulness of the model through an illustrative application.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-019.

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Date of creation: 2011
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Handle: RePEc:dgr:kubcen:2011019

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Web page: http://center.uvt.nl

Related research

Keywords: household consumption; caring preferences; intrahousehold coop- eration; Nash equilibrium; revealed preferences;

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References

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  1. Martin Browning & Valerie Lechene & Pierre-Andre Chiappori, 2006. "Distributional effects in household models: separate spheres and income pooling," Economics Series Working Papers 293, University of Oxford, Department of Economics.
  2. Valerie Lechene & Martin Browning, 2004. "Collective and unitary models: a clarification," Economics Series Working Papers 191, University of Oxford, Department of Economics.
  3. Claude d’Aspremont & Rodolphe Dos Santos Ferreira, 2009. "Household behavior and individual autonomy," Working Papers of BETA 2009-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
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Cited by:
  1. Bastani, Spencer, 2012. "Gender-Based and Couple-Based Taxation," Working Paper Series, Center for Fiscal Studies 2012:6, Uppsala University, Department of Economics.

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