Sharing of Resources within the Family and the Economics of Household Decision-making

Over the last thirty years, economic models have been developed that recognize that potentially conflicting interests may shape household decisions and the sharing of resources within families. This paper provides an overview of how decision-making within households has been modeled within economics, presents the main benefits and limitations of those models and critically assesses their usefulness to those from other disciplines interested in within-household distribution. Our main focus is on the theory, empirical application and results of the currently dominant collective models, but we also look at developments that led up to them and some subsequent extensions and alternative approaches. Given the weight policy-makers and others put on economic and quantitative evidence, it is incumbent on researchers of all disciplines to understand on what such evidence is based, that is, the achievements and limitations of the models used to produce it and the assumptions that lie behind them.