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Noncooperative Household Consumption with Caring

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  • Laurens Cherchye
  • Sam Cosaert
  • Thomas Demuynck
  • Bram De Rock

Abstract

We present a household consumption model that accounts for caring household members, while allowing for noncooperative behavior in decisions on public goods. The intrahousehold consumption outcome critically depends on the degree of caring between the household members. By varying the degree of intrahousehold caring, the model encompasses a whole continuum of household consumption models that are situated between the fully cooperative model and the noncooperative model without caring. This feature is used to define a measure for the degree of cooperation within the household. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intrahousehold transfers. Finally, following a revealed preference approach, we derive testable implications of the model for empirical data. We show the practical usefulness of our model by an application to panel data on two-person household consumption drawn from the Russia Longitudinal Monitoring Survey. We find that the degree of cooperation varies considerably across couples. We relate this variation to observable household characteristics, and find that older couples are generally more cooperative.
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Suggested Citation

  • Laurens Cherchye & Sam Cosaert & Thomas Demuynck & Bram De Rock, 2015. "Noncooperative Household Consumption with Caring," Working Papers ECARES ECARES 2015-46, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/221190
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    Cited by:

    1. Spencer Bastani, 2013. "Gender-based and couple-based taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 653-686, August.
    2. Chandra Bhat & Konstadinos Goulias & Ram Pendyala & Rajesh Paleti & Raghuprasad Sidharthan & Laura Schmitt & Hsi-Hwa Hu, 2013. "A household-level activity pattern generation model with an application for Southern California," Transportation, Springer, pages 1063-1086.
    3. Bram De Rock & Tom Potoms & Denni Tommasi, 2017. "Household Responses to Cash Transfers," Working Papers ECARES 2017-38, ULB -- Universite Libre de Bruxelles.

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    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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