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Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power

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  • Martin Browning
  • Pierre-Andre Chiappori
  • Arthur Lewbel

Abstract

How much income would a woman living alone require to attain the same standard of living that she would have if she were married? What percentage of a married couple`s expenditures are controlled by the husband? How much money does a couple save on consumption goods by living together versus living apart? We propose and estimate a collective model of household behavior that permits identification and estimation of concepts such as these. We model households in terms of the utility functions of its members, a bargaining or social welfare function, and a consumption technology function. We demonstrate generic nonparametric identification of the model, and hence of a version of adult equivalence scales that we call indifference scales, as well as consumption economies of scale, the household`s resource sharing rule or members` bargaining power, and other related concepts.

Suggested Citation

  • Martin Browning & Pierre-Andre Chiappori & Arthur Lewbel, 2006. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Economics Series Working Papers 289, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:289
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    More about this item

    Keywords

    Consumer Demand; Collective Model; Adult Eqivalence Scales; Indifference Scales; Household Bargaining; Economies of Scale; Demand Systems; Bargaining Power; Barten Scales; Sharing Rule; Nonparametric Identification.;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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