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Kinky choices, dictators and split might. A non-cooperative model for household consumption and labor supply

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  • Jan BOONE
  • Karen VAN DER WIEL
  • Arthur VAN SOEST
  • Frederic VERMEULEN

Abstract

We model consumption and labor supply behavior of a couple in a non-cooperative setting. Using minimal assumptions, we prove that demand for public goods is characterized by three regimes. It is either determined by the preferences of one of the partners only (Husband Dictatorship or Wife Dictatorship), or by both spouses’ preferences, in which case each partner’s influence depends on the relative wage rates (Split Might). The model is illustrated empirically using a sample drawn from the Consumer Expenditure Survey (CEX) where expenditures on children’s goods are a public good in both spouses’ preferences. It turns out that the spending pattern reflects the husband’s preferences in about 54% of the couples in our sample. Still, in an important minority of the households (about 45%), the wife acts as a dictator. Somewhat less than 1% of the couples is characterized by a split might regime.

Suggested Citation

  • Jan BOONE & Karen VAN DER WIEL & Arthur VAN SOEST & Frederic VERMEULEN, 2014. "Kinky choices, dictators and split might. A non-cooperative model for household consumption and labor supply," Working Papers Department of Economics ces14.21, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces14.21
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    Cited by:

    1. Laurens Cherchye & Sam Cosaert & Thomas Demuynck & Bram De Rock, 2017. "Group Consumption with Caring Individuals," Working Papers ECARES ECARES 2017-45, ULB -- Universite Libre de Bruxelles.
    2. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK, 2010. "Noncooperative household consumption with caring," Working Papers Department of Economics ces10.34, KU Leuven, Faculty of Economics and Business, Department of Economics.

    More about this item

    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

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