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Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power

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  • Martin Browning
  • Pierre-Andre Chiappori

Abstract

How much income would a woman living alone require to attain the same standard of living that she would have if she were married? What percentage of a married couple`s expenditures are controlled by the husband? How much money does a couple save on consumption goods by living together versus living apart? We propose and estimate a collective model of household behavior that permits identification and estimation of concepts such as these. We model households in terms of the utility functions of its members, a bargaining or social welfare function, and a consumption technology function. We demonstrate generic nonparametric identification of the model, and hence of a version of adult equivalence scales that we call indifference scales, as well as consumption economies of scale, the household`s resource sharing rule or members` bargaining power, and other related concepts.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 289.

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Date of creation: 01 Oct 2006
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Handle: RePEc:oxf:wpaper:289

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Keywords: Consumer Demand; Collective Model; Adult Eqivalence Scales; Indifference Scales; Household Bargaining; Economies of Scale; Demand Systems; Bargaining Power; Barten Scales; Sharing Rule; Nonparametric Identification.;

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