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Opening the Black-Box of Intrahousehold Decision-Making Theory and Nonparametric Empirical Tests of General Collective Consumption Models

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Author Info
Laurens Cherchye
Bram De Rock
Frederic Vermeulen

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Abstract

We provide nonparametric 'revealed preference' tests of general collective consumption models that account for public consumption and externalities within the household. We further propose a novel approach to model special cases of the general collective model, which imply alternative assumptions regarding the sharing rule that underlies the observed collective consumption behavior. Our application uses data from the Russia Longitudinal Monitoring Survey (RLMS); the panel structure of this data set allows nonparametric testing of the behavioral models without relying on preference homogeneity assumptions across similar individuals. Our application includes test results but also a power analysis for the models under study. Our main finding is that the most general collective model, together with a large class of special cases of the general model, cannot be rejected for the couples in our data set. By contrast, our tests do reject the standard unitary model for these couples. Since our tests are entirely nonparametric, this provides strong evidence in favor of models focusing on intrahousehold decision-making.

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Publisher Info
Paper provided by Université Libre de Bruxelles, Ecares in its series ECARES Working Papers with number 2008_030.

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Length: 30 pages
Date of creation: 2008
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Handle: RePEc:eca:wpaper:2008_030

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Related research
Keywords: collective household models; intrahousehold allocation; revealed preferences; nonparametric analysis;

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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
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. 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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  2. 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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  3. Cherchye, L. & Rock, B. de & Vermeulen, F.M.P., 2004. "The collective model of household consumption : a nonparametric characterization," Discussion Paper 76, Tilburg University, Center for Economic Research. [Downloadable!]
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  4. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July. [Downloadable!] (restricted)
  5. 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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  6. Fortin, B. & Lacroix, G., 1993. "A Test of the Neoclassical and Collective Models of Household Labour Supply," Papers 9335, Laval - Recherche en Politique Economique.
  7. Frederic Vermeulen, 2005. "And the winner is... An empirical evaluation of unitary and collective labour supply models," Empirical Economics, Springer, vol. 30(3), pages 711-734, October. [Downloadable!] (restricted)
  8. Richard W. Blundell & Martin Browning & Ian A. Crawford, 2003. "Nonparametric Engel Curves and Revealed Preference," Econometrica, Econometric Society, vol. 71(1), pages 205-240, January. [Downloadable!] (restricted)
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  9. 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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  10. Cherchye, Laurens & Vermeulen, Frederic, 2006. "Nonparametric analysis of household labor supply: goodness-of-fit and power of the unitary and the collective model," Discussion Paper 13, Tilburg University, Center for Economic Research. [Downloadable!]
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  11. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
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  12. Susan K. Snyder, 2000. "Nonparametric Testable Restrictions of Household Behavior," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 171-185, July.
  13. Varian, Hal R, 1983. "Non-Parametric Tests of Consumer Behaviour," Review of Economic Studies, Blackwell Publishing, vol. 50(1), pages 99-110, January. [Downloadable!] (restricted)
  14. Browning, Martin & Meghir, Costas, 1991. "The Effects of Male and Female Labor Supply on Commodity Demands," Econometrica, Econometric Society, vol. 59(4), pages 925-51, July. [Downloadable!] (restricted)
  15. Dr. Peter Kenning & Hilke Plassmann, 2004. "NeuroEconomics," Experimental 0412005, EconWPA. [Downloadable!]
  16. 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)
  17. 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. Guy Lacroix & Natalia Radtchenko, 2008. "The Changing Intra-Household Resource Allocation in Russia," Cahiers de recherche 0811, CIRPEE. [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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