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The Revealed Preference Approach to Collective Consumption Behavior: Testing, Recovery and Welfare Analysis

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Author Info
Laurens Cherchye
Bram De Rock
Frederic Vermeulen

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Abstract

We present a nonparametric 'revealed preference' methodology for empirically analyzing collective consumption behavior. First, we introduce an integer programming (IP) methodology for testing data consistency with alternative collective consumption models: the 'general' case in which any good can be publicly consumed as well as privately consumed, possibly with externalities; and 'special' cases that impose specific prior structure (e.g. the case with all goods publicly consumed, and the case with all goods privately consumed without externalities). In addition, we show that this IP methodology can include information on 'assignable quantities' for particular goods. Next, we demonstrate that the IP methodology allows for recovering the structural collective decision model (including the sharing rule) from the observed collective consumption behavior. In turn, this makes it possible to address welfare-related questions that are specific to the collective consumption model.

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Publisher Info
Paper provided by Université Libre de Bruxelles, Ecares in its series ECARES Working Papers with number 2008_029.

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Length: 55 pages
Date of creation: 2008
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Handle: RePEc:eca:wpaper:2008_029

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Related research
Keywords: collective model; revealed preferences; consumption; testing; recovery; welfare analysis; integer programming;

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Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Richard Blundell & Jean-Marc Robin, 2000. "Latent Separability: Grouping Goods without Weak Separability," Econometrica, Econometric Society, vol. 68(1), pages 53-84, January.
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  2. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June. [Downloadable!] (restricted)
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  3. Pierre-Carl Michaud & Frederic Vermeulen, 2006. "A Collective Labor Supply Model: Identification and Estimation in the Presence of Externalities by Means of Panel Data," Working Papers 406, RAND Corporation Publications Department. [Downloadable!]
  4. Richard Blundell & Martin Browning & Ian Crawford, 2005. "Best nonparametric bounds on demand responses," IFS Working Papers W05/20, Institute for Fiscal Studies. [Downloadable!]
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  5. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July. [Downloadable!] (restricted)
  6. Martin Browning & Pierre-AndrŽe Chiappori & Arthur Lewbel, 2004. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Boston College Working Papers in Economics 588, Boston College Department of Economics, revised 04 Sep 2006. [Downloadable!]
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  7. Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140. [Downloadable!] (restricted)
  8. Arthur Lewbel & Krishna Pendakur, 2008. "Estimation of Collective Household Models With Engel Curves," Boston College Working Papers in Economics 694, Boston College Department of Economics. [Downloadable!]
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  9. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-96, December. [Downloadable!] (restricted)
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  10. FRANÇOIS BOURGUIGNON & MARTIN BROWNING & PIERRE-ANDRÉ CHIAPPORI, 2009. "Efficient Intra-Household Allocations and Distribution Factors: Implications and Identification," Review of Economic Studies, Blackwell Publishing, vol. 76(2), pages 503-528, 04. [Downloadable!] (restricted)
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  11. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2007. "The Collective Model of Household Consumption: A Nonparametric Characterization," Econometrica, Econometric Society, vol. 75(2), pages 553-574, 03. [Downloadable!] (restricted)
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  12. Victor Chernozhukov & Han Hong & Elie Tamer, 2007. "Estimation and Confidence Regions for Parameter Sets in Econometric Models," Econometrica, Econometric Society, vol. 75(5), pages 1243-1284, 09. [Downloadable!] (restricted)
  13. Donald J. Brown & Chris Shannon, 2000. "Uniqueness, Stability, and Comparative Statics in Rationalizable Walrasian Markets," Econometrica, Econometric Society, vol. 68(6), pages 1529-1540, November.
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  14. Richard Blundell & Martin Browning & Ian Crawford, 1998. "Nonparametric Engel Curves and Revealed Preference," Discussion Papers 99-07, University of Copenhagen. Department of Economics. [Downloadable!]
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  15. James Andreoni & William T. Harbaugh, 2006. "Power Indices for Revealed Preference Tests," Levine's Bibliography 122247000000001257, UCLA Department of Economics. [Downloadable!]
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  16. Blow, Laura & Crawford, Ian, 2001. "The Cost of Living with the RPI: Substitution Bias in the UK Retail Prices Index," Economic Journal, Royal Economic Society, vol. 111(472), pages F357-82, June. [Downloadable!] (restricted)
  17. Valérie Lechene & Ian Preston, 2007. "Demand properties in household Nash equilibrium," IFS Working Papers W07/01, Institute for Fiscal Studies. [Downloadable!]
  18. Richard Blundell & Pierre-André Chiappori & Costas Meghir, 2005. "Collective Labor Supply with Children," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1277-1306, December. [Downloadable!] (restricted)
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  19. Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
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  20. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, vol. 130(1), pages 1-26, September. [Downloadable!] (restricted)
  21. Brown, Donald J & Matzkin, Rosa L, 1996. "Testable Restrictions on the Equilibrium Manifold," Econometrica, Econometric Society, vol. 64(6), pages 1249-62, November. [Downloadable!] (restricted)
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  22. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2008. "An Afriat Theorem for the Collective Model of Household Consumption," IZA Discussion Papers 3794, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Laurens Cherchye & Bram De Rock & Jeroen Sabbe & Frederic Vermeulen, 2008. "Nonparametric Tests of Collectively Rational Consumption Behavior: an Integer Programming Procedure," ECARES Working Papers 2008_001, Université Libre de Bruxelles, Ecares. [Downloadable!]
    Other versions:
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