Efficient Intra-Household Allocations - A General Characterization and Empirical Tests
AbstractThe neo-classical theory of demand applies to individuals yet in empirical work it is usually taken as valid for households with many members. This paper explores what the theory of individuals implies for households with many members. This paper explores what the theory of individuals implies for households which have more than one member. We make minimal assumptions about how the individual members of the household resolve conflicts. All we assume is that however decisions are made, outcomes are efficient. We refer to this as the collective setting. We show that in the collective setting household demands must satisfy a symmetry and rank condition on the Slutsky matrix. We also present some further results on the effects on demands of variables that do nor modify preferences but that do affect how decisions are made. We apply our theory to a series of surveys of household expendityres from Canada. The tests of the usual symmetry conditions are rejected for two person households but not for one person households. We also show that income pooling is rejected for two person households. We then test for our collective setting conditions on the couples data. None of the collective setting restrictions are rejected. We conclde that the collective setting is a plausible and tractable next step to take in thje analysis of household behaviour.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 96-10.
Length: 47 pages
Date of creation: Feb 1996
Date of revision:
Publication status: Published in: Econometrica, 1998, 66(6) pp 1241-78
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Other versions of this item:
- 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.
- Browning, M. & Chiappori, P.A., 1994. "Efficient Intra-Household allocations: A General Characterization and Empirical Tests," DELTA Working Papers 94-16, DELTA (Ecole normale supérieure).
- Martin Browning & Pierre-Andre Chiappori, 1994. "Efficient Intra-Household Allocations: a General Characterization and Empirical Tests," Department of Economics Working Papers 1994-02, McMaster University.
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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