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