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A Sharing Model of the Household: Explaining the Deaton-Paxson Paradox and Computing Household Indifference Scales

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  • Gutierrez, Federico H.

Abstract

This paper presents a new model of the household that is able to explain a variety of consumption patterns that existing models cannot describe, most notably, those associated with the Deaton and Paxson (1998) paradox. The most distinctive feature of this model is the presence of common-pool goods (rival and non-excludable) previously ignored in the literature. Under regularity conditions, the model can be interpreted as a hybrid between non-cooperative and a collective models of the household. Empirically, the paper revisits the Deaton-Paxson paradox exploiting household splits in longitudinal data and computes the elusive indifference scales coefficients.

Suggested Citation

  • Gutierrez, Federico H., 2018. "A Sharing Model of the Household: Explaining the Deaton-Paxson Paradox and Computing Household Indifference Scales," GLO Discussion Paper Series 166, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:166
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    More about this item

    Keywords

    sharing model; collective model; intra-household allocation; Deaton-Paxson paradox; household economies of scale; indifference scales;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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