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The family under the microscope: an experiment testing economic models of household choice

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Author Info
Munro, Alistair
Bateman, Ian J.
McNally, Tara

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Abstract

We devise and execute three experiments to test key features of models of household decision-making. Using established couples (married and unmarried) we test income pooling, unanimity and Pareto efficiency. Subjects make choices individually and jointly and are asked to make predictions about their partner’s choices. Unanimity is rejected. Income pooling is not rejected in joint choice but has less explanatory power in individual choice. In direct tests both sexes do not pool income completely, but in econometric tests across all tasks, women place an equal weight on payoffs but men discount their partner’s payoffs by between 15 and 20%. We find that transparency has little impact on deviations from income pooling or indeed on behaviour generally. Many joint choices deviate from the Pareto principle in a systematic manner suggesting that choices made as a couple are more risk averse than individual decisions.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8974.

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Date of creation: 02 Jun 2008
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Handle: RePEc:pra:mprapa:8974

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Related research
Keywords: experiment household unitary income pooling Pareto family

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Find related papers by JEL classification:
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D1 - Microeconomics - - Household Behavior

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  2. Doss, Cheryl R., 1996. "Testing among models of intrahousehold resource allocation," World Development, Elsevier, vol. 24(10), pages 1597-1609, October. [Downloadable!] (restricted)
  3. Corfman, Kim P & Lehmann, Donald R, 1987. "Models of Cooperative Group Decision-Making and Relative Influence: An Experimental Investigation of Family Purchase Decisions," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 14(1), pages 1-13, June.
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    Other versions:
  5. Alderman, Harold, et al, 1995. "Unitary versus Collective Models of the Household: Is It Time to Shift the Burden of Proof?," World Bank Research Observer, Oxford University Press, vol. 10(1), pages 1-19, February.
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  7. Christopher R. Udry & Esther Duflo, 2004. "Intrahousehold Resource Allocation in Cote D'Ivoire: Social Norms, Separate Accounts and Consumption Choices," Yale School of Management Working Papers ysm407, Yale School of Management. [Downloadable!]
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  8. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211. [Downloadable!] (restricted)
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  10. Harless, David W & Camerer, Colin F, 1994. "The Predictive Utility of Generalized Expected Utility Theories," Econometrica, Econometric Society, vol. 62(6), pages 1251-89, November. [Downloadable!] (restricted)
  11. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October. [Downloadable!] (restricted)
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  13. Bolin, Kristian & Jacobson, Lena & Lindgren, Bjorn, 2002. "The family as the health producer--when spouses act strategically," Journal of Health Economics, Elsevier, vol. 21(3), pages 475-495, May. [Downloadable!] (restricted)
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