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Is consumption efficiency within households falsifiable?

Author

Listed:
  • Anyck Dauphin

    (Université du Québec en Outaouais, CRREP and CDESG)

  • Bernard Fortin

    () (Université Laval, CRREP and CIRANO)

  • Guy Lacroix

    (Université Laval, CRREP and CIRANO)

Abstract

The collective household model is based upon the assumption that decision makers have achieved efficient outcomes. This paradigm, which has become one of the leading approaches in family economics, is seldom, if ever, rejected, raising doubt about its falsifiability. We show that the standard approach to test the collective model may yield misleading inferences. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision makers. We provide an informal meta-analysis that suggests that much of the evidence in favor of collective rationality in the empirical literature appears to be inconsistent with our test. We illustrate the latter using data from a survey we have conducted in Burkina Faso. Consumption efficiency within monogamous households is not rejected using the standard testing procedure while it is clearly rejected using our proposed test procedure. Furthermore, our test also rejects consumption efficiency for bigamous households. We conclude that intra-household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.

Suggested Citation

  • Anyck Dauphin & Bernard Fortin & Guy Lacroix, 2018. "Is consumption efficiency within households falsifiable?," Review of Economics of the Household, Springer, vol. 16(3), pages 737-766, September.
  • Handle: RePEc:kap:reveho:v:16:y:2018:i:3:d:10.1007_s11150-016-9359-4
    DOI: 10.1007/s11150-016-9359-4
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    References listed on IDEAS

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    Cited by:

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    2. Marcos A. Rangel & Duncan Thomas, 2019. "Decision-Making in Complex Households," Working Papers 2019-070, Human Capital and Economic Opportunity Working Group.
    3. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    4. Marcos Rangel & Duncan Thomas, 2019. "Decision-Making in Complex Households," NBER Working Papers 26511, National Bureau of Economic Research, Inc.
    5. Brad R. Humphreys & Jane E. Ruseski & Jie Yang, 2020. "Household consumption decisions: will expanding sports betting impact health?," Review of Economics of the Household, Springer, vol. 18(4), pages 1079-1100, December.
    6. Rangel, Marcos & Thomas, Duncan, 2020. "Decision-Making in Complex Households," CEPR Discussion Papers 14278, C.E.P.R. Discussion Papers.
    7. Matthias Doepke & Michèle Tertilt, 2019. "Does female empowerment promote economic development?," Journal of Economic Growth, Springer, vol. 24(4), pages 309-343, December.

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    More about this item

    Keywords

    Collective model; Distribution factors; Rationality; Efficiency; Polygamy;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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