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The revealed preference approach to collective consumption behavior: Testing and sharing rule recovery

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  • Cherchye, L.J.H.

    (Tilburg University)

  • Rock, B. de
  • Vermeulen, F.M.P.

    (Tilburg University)

Abstract

We present a revealed preference methodology for empirically analysing collective consumption behaviour. First, we introduce an integer programming (IP) methodology for testing data consistency with collective consumption models that account for publicly as well as privately consumed goods. This IP methodology can include information on "assignable quantities" for private goods. Next, we show that the IP methodology allows for recovering the personalized (Lindahl) prices for the public goods and the personalized quantities for the private goods. In turn, this implies recovery of the sharing rule (i.e. personalized income share levels). An empirical application demonstrates the practical usefulness of the methodology. Copyright 2011, Oxford University Press.

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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:12-3857700.

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Date of creation: 2011
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Publication status: Published in Review of Economic Studies (2011) v.78, p.176-198
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-3857700

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

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  1. Cherchye, L.J.H. & Rock, B. de & Vermeulen, F.M.P., 2009. "Opening the black box of intra-household decision-making: Theory and non-parametric empirical tests of general collective consumption models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3607141, Tilburg University.
  2. Cherchye, L.J.H. & Rock, B. de & Sabbe, J. & Vermeulen, F.M.P., 2008. "Nonparametric Tests of Collectively Rational Consumption Behavior: An Integer Programming Procedure," Discussion Paper 2008-2, Tilburg University, Center for Economic Research.
  3. Cherchye, L.J.H. & Rock, B. de & Vermeulen, F.M.P., 2004. "The Collective Model of Household Consumption: A Nonparametric Characterization," Discussion Paper 2004-76, Tilburg University, Center for Economic Research.
  4. Richard Blundell & Martin Browning & Ian Crawford, 2005. "Best Nonparametric Bounds on Demand Responses," CAM Working Papers 2005-16, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
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  9. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
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  17. Lewbel, Arthur & Pendakur, Krishna, 2008. "Estimation of collective household models with Engel curves," Journal of Econometrics, Elsevier, vol. 147(2), pages 350-358, December.
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  21. William Harbaugh & Kate Krause & Timothy Berry, 2001. "Garp for kids: On the development of rational choice behavior," Artefactual Field Experiments 00056, The Field Experiments Website.
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