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How falsifiable is collective rationality ?

Author

Listed:
  • Anyck Dauphin
  • Bernard Fortin
  • Guy Lacroix

Abstract

Collective rationality is seldom if ever rejected in the literature, raising doubt about its falsifiability. We show that the standard approach to test the collective model with distribution factors may yield misleading inference. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision-makers (e.g., polygamous households, adult children). We provide a brief and informal meta-analysis that suggests that much of the evidence in favour 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. Collective rationality 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 collective rationality for bigamou households. We conclude that the household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.

Suggested Citation

  • Anyck Dauphin & Bernard Fortin & Guy Lacroix, 2018. "How falsifiable is collective rationality ?," Cahiers de recherche 1804, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
  • Handle: RePEc:lvl:crrecr:1804
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    More about this item

    Keywords

    Collective model; Distribution Factors; Rationality; Efficiency; Polygamy;

    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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