The Distribution of Income and Expenditure within the Household

Most economic models of the household assume that it may be treated as if all members share the same preferences or one member (a dictator) makes all resource allocation decisions. That assumption is tested by asking whether income in the hands of men has the same impact on household commodity demand as income in the hands of women. Drawing on budget data from Brazil, we find that the distribution of income among men and women within the household does affect demand patterns and this is true for both non-labor income as well as total income. Income in the hands of women, relative to men, is associated with a larger increase in the share of the household budget devoted to human capital (household services, health and education) and also leisure (recreation and ceremonies) goods. The proportion of the budget spent on food declines more if the income is in the hands of women although food composition also changes and nutrient intakes rise faster as women's income increases. When the sample is restricted to only those couples in which both have some income, however, there is little evidence that income in the hands of men and women have significantly different effects on commodity consumption.