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Household decision and equivalence scales

Author

Listed:
  • Udo Ebert
  • Patrick Moyes

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

Abstract

Considering an economy with two goods {a private good and a household good with a variable degree of publicness {and identical individuals, the paper investigates the implications for economies of size of two extreme households' decision rules: (i) the cooperative model, where households maximize the welfare of their members, and (ii) the non-cooperative model, where each household's member maximizes her own utility. Under the cooperative rule, publicness of the household good is necessary and sufficient for positive economies of size and for these to increase with family size. This no longer holds true under the non-cooperative rule where negative economies of size may appear even in the case where the household consumption good is purely public. The results suggest that it is the inefficiency of the non-cooperative rule that is at the origin of the problem. Furthermore comparison of the scale factors' values indicates that the cooperative rule leads to less generous scales than the non-cooperative one.
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Suggested Citation

  • Udo Ebert & Patrick Moyes, 2004. "Household decision and equivalence scales," Post-Print hal-00160180, HAL.
    • Handle: RePEc:hal:journl:hal-00160180
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00160180
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    References listed on IDEAS

    as
    1. Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005. "On the income dependence of equivalence scales," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 967-996, June.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, vol. 44(2), pages 77-124, April.
    4. Bourguignon, Francois & Chiappori, Pierre-Andre, 1992. "Collective models of household behavior : An introduction," European Economic Review, Elsevier, vol. 36(2-3), pages 355-364, April.
    5. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    6. Paolo Figini, 1998. "Inequality Measures, Equivalence Scales and Adjustment for Household Size and Composition," Economics Technical Papers 988, Trinity College Dublin, Department of Economics.
    7. Udo Ebert & Patrick Moyes, 2003. "Equivalence Scales Reconsidered," Econometrica, Econometric Society, vol. 71(1), pages 319-343, January.
    8. Patrick Moyes & Stephen Bazen, 2003. "International Comparisons of Income Distribution," LIS Working papers 341, LIS Cross-National Data Center in Luxembourg.
    9. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-1434, November.
    10. Donaldson, David & Pendakur, Krishna, 2006. "The Identification of Fixed Costs From Consumer Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 255-265, July.
    11. Stephen Bazen & Patrick Moyes, 2003. "International comparisons of income distributions when population structures differ," Post-Print hal-00156458, HAL.
    12. Jenkins, Stephen P & Lambert, Peter J, 1993. "Ranking Income Distributions When Needs Differ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 337-356, December.
    13. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Journal of Economics, Springer, vol. 86(1), pages 19-27, October.
    14. Donaldson, David & Pendakur, Krishna, 2004. "Equivalent-expenditure functions and expenditure-dependent equivalence scales," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 175-208, January.
    15. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-1082, September.
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    Citations

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    Cited by:

    1. Ahlheim, Michael & Schneider, Friedrich, 2013. "Considering Household Size in Contingent Valuation Studies," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79974, Verein für Socialpolitik / German Economic Association.
    2. repec:old:wpaper:333 is not listed on IDEAS
    3. Nicolas Gravel & Patrick Moyes, 2013. "Utilitarianism or welfarism: does it make a difference?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(2), pages 529-551, February.
    4. Antonella Caiumi & Federico Perali, 2015. "Who bears the full cost of children? Evidence from a collective demand system," Empirical Economics, Springer, vol. 49(1), pages 33-64, August.
    5. Udo EBERT & Patrick MOYES, 2016. "Inequality of Living Standards and Isoelastic Equivalence Scales," Cahiers du GREThA 2016-27, Groupe de Recherche en Economie Théorique et Appliquée.
    6. Udo Ebert, 2011. "The redistribution of income when needs differ," Working Papers V-331-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    7. Udo Ebert, 2013. "The relationship between individual and household measures of WTP and WTA," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(2), pages 367-390, February.
    8. repec:old:wpaper:331 is not listed on IDEAS
    9. Udo Ebert & Patrick Moyes, 2011. "Inequality of Well-Being and Isoelastic Equivalence Scales," Working Papers V-333-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    10. Moyes, Patrick, 2012. "Comparisons of heterogeneous distributions and dominance criteria," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1351-1383.
    11. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, vol. 69(1), pages 55-67, July.
    12. Lucia Mangiavacchi & Luca Piccoli, 2009. "Child welfare and intra-household inequality in Albania," Working Papers 149, ECINEQ, Society for the Study of Economic Inequality.
    13. repec:zbw:hohpro:331 is not listed on IDEAS
    14. repec:zbw:hohpro:333 is not listed on IDEAS
    15. Udo Ebert & Patrick Moyes, 2017. "Inequality and isoelastic equivalence scales: restrictions and implications," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(2), pages 295-326, February.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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