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

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Author Info
Martin Browning
Pierre-Andre Chiappori
Arthur Lewbel

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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: 2006
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Handle: RePEc:oxf:wpaper:289

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Related research
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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Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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  1. Chiuri, M C & Simmons, P J, 1997. "Universal Decentralisation: A Demand System for Collective and Unitary Models with Household Public Goods," Economic Journal, Royal Economic Society, vol. 107(441), pages 372-89, March. [Downloadable!] (restricted)
  2. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-21, May. [Downloadable!] (restricted)
  3. Frederic Vermeulen & Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck , 2006. "Collective Models of Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach," Review of Economics of the Household, Springer, vol. 4(2), pages 113-127, 06. [Downloadable!] (restricted)
  4. Frederic Vermeulen, 2000. "Collective household models: principles and main results," Public Economics Working Paper Series ces0028, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics. [Downloadable!]
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  5. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, vol. 87(347), pages 460-87, September. [Downloadable!] (restricted)
  6. Bourguignon, F. & Browning, M. & Chiappori, P. A., 1995. "The Collective Approach to Household Behaviour," DELTA Working Papers 95-04, DELTA (Ecole normale supérieure).
  7. Rubalcava, L. & Thomas, D., 2000. "Family Bargaining and Welfare," Papers 00-10, RAND - Labor and Population Program.
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  8. Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
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  9. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November. [Downloadable!] (restricted)
  10. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
  11. P. A. Chiappori & I. Ekeland, 1999. "Aggregation and Market Demand: An Exterior Differential Calculus Viewpoint," Econometrica, Econometric Society, vol. 67(6), pages 1435-1458, November.
  12. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers 92-23, DELTA (Ecole normale supérieure).
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  13. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September. [Downloadable!] (restricted)
  14. Barmby, Tim & Smith, Nina, 2001. "Household Labour Supply in Britain and Denmark: Some Interpretations Using a Model of Pareto Optimal Behaviour," Applied Economics, Taylor and Francis Journals, vol. 33(9), pages 1109-16, July. [Downloadable!] (restricted)
  15. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August. [Downloadable!] (restricted)
  16. Lewbel, Arthur, 2003. "Calculating compensation in cases of wrongful death," Journal of Econometrics, Elsevier, vol. 113(1), pages 115-128, March. [Downloadable!] (restricted)
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  17. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-14, November. [Downloadable!] (restricted)
  18. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March. [Downloadable!] (restricted)
  19. Lewbel, Arthur, 1985. "A Unified Approach to Incorporating Demographic or Other Effects into Demand Systems," Review of Economic Studies, Blackwell Publishing, vol. 52(1), pages 1-18, January. [Downloadable!] (restricted)
  20. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February. [Downloadable!] (restricted)
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  21. Daniel T. Slesnick, 1998. "Empirical Approaches to the Measurement of Welfare," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2108-2165, December. [Downloadable!] (restricted)
  22. Jorgenson, Dale W & Slesnick, Daniel T, 1987. "Aggregate Consumer Behavior and Household Equivalence Scales," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 219-32, April.
  23. Gregory, Allan W & Veall, Michael R, 1985. "Formulating Wald Tests of Nonlinear Restrictions," Econometrica, Econometric Society, vol. 53(6), pages 1465-68, November. [Downloadable!] (restricted)
  24. Andrew Chesher, 1998. "Individual demands from household aggregates: time and age variation in the composition of diet," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 505-524. [Downloadable!]
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