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Opening the black box of intra-household decision-making: Theory and non-parametric empirical tests of general collective consumption models

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  • Cherchye, L.J.H.

    (Tilburg University)

  • Rock, B. de
  • Vermeulen, F.M.P.

    (Tilburg University)

Abstract

We provide "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 this model, which imply alternative assumptions regarding the sharing rule. Our application uses the panel data from the Russia Longitudinal Monitoring Survey. We find that the general model, together with a large class of special cases, cannot be rejected. By contrast, we do reject the standard unitary model. Since our tests are entirely nonparametric, this provides strong evidence in favor of models focusing on intrahousehold decision making. (c) 2009 by The University of Chicago. All rights reserved..

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-3607141.

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Date of creation: 2009
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Publication status: Published in Journal of Political Economy (2009) v.117, p.1074-1104
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-3607141

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Web page: http://www.tilburguniversity.edu/

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  1. Andreoni,J. & Harbaugh,W.T., 2005. "Power indices for revealed preference tests," Working papers, Wisconsin Madison - Social Systems 10, Wisconsin Madison - Social Systems.
  2. Martin Browning & Pierre-Andre Chiappori, 2006. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Economics Series Working Papers, University of Oxford, Department of Economics 289, University of Oxford, Department of Economics.
  3. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, Econometric Society, vol. 56(1), pages 63-90, January.
  4. Cherchye, Laurens & Vermeulen, Frederic, 2006. "Nonparametric Analysis of Household Labor Supply: Goodness-of-Fit and Power of the Unitary and the Collective Model," IZA Discussion Papers 2004, Institute for the Study of Labor (IZA).
  5. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2007. "The Collective Model of Household Consumption: A nonparametric characterization," ULB Institutional Repository 2013/98559, ULB -- Universite Libre de Bruxelles.
  6. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 945-73, July.
  7. Richard Blundell & Martin Browning & Ian Crawford, 2005. "Best nonparametric bounds on demand responses," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP12/05, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  8. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(3), pages 437-67, June.
  9. Richard Blundell & Martin Browning & Ian Crawford, 1997. "Non-parametric Engel curves and revealed preferences," IFS Working Papers, Institute for Fiscal Studies W97/14, Institute for Fiscal Studies.
  10. Susan K. Snyder, 2000. "Nonparametric Testable Restrictions of Household Behavior," Southern Economic Journal, Southern Economic Association, Southern Economic Association, vol. 67(1), pages 171-185, July.
  11. Fortin, B. & Lacroix, G., 1993. "A Test of the Neoclassical and Collective Models of Household Labour Supply," Papers, Laval - Recherche en Politique Economique 9335, Laval - Recherche en Politique Economique.
  12. Frederic Vermeulen, 2005. "And the winner is... An empirical evaluation of unitary and collective labour supply models," Empirical Economics, Springer, Springer, vol. 30(3), pages 711-734, October.
  13. Browning, M. & Chiappori, P.A., 1994. "Efficient Intra-Household allocations: A General Characterization and Empirical Tests," DELTA Working Papers, DELTA (Ecole normale supérieure) 94-16, DELTA (Ecole normale supérieure).
  14. Browning, Martin & Meghir, Costas, 1991. "The Effects of Male and Female Labor Supply on Commodity Demands," Econometrica, Econometric Society, Econometric Society, vol. 59(4), pages 925-51, July.
  15. Varian, Hal R, 1983. "Non-Parametric Tests of Consumer Behaviour," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(1), pages 99-110, January.
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