Non-unitary Models of Household Behavior: A Survey of the Literature

This article considers non-unitary models of household behavior. These models suppose explicitly that households consist of a number of different members with preferences that are different from each other. They can be split up into two principal categories: cooperative (or collective) models, in which the allocations are supposed to be Pareto efficient; and non-cooperative (or strategic) models which are based on the concept of Cournot-Nash equilibrium. The demand functions that describe household behavior in these models are subject to constraints that differ from the traditional Slutsky conditions. In addition, in a certain number of specific cases, the preferences of the different household members can be identified from observable behavior.households, collective model, strategic model, testability, identification

Testing Contract Theory: A Survey of Some Recent Work

While the theoretical literature on contracts has been enormous since the seventies, empirical tests of the theory have long remained scarce. However, new empirical work has been developed in the last ten years that sheds light on the empirical validation of the theory. This paper aims at surveying the recent empirical work on contracts. The focus throughout is on the need to properly account for unobserved heterogeneity.

Relative Risk Aversion Is Constant: Evidence from Panel Data

Most classical tests of constant relative risk aversion (CRRA) based on individual portfolio composition use cross sectional data. Such tests must assume that the distributions of wealth and preferences are independent. We use panel data to analyze how individuals’ portfolio allocation between risky and riskless assets varies in response to changes in total financial wealth. We find the elasticity of the risky asset share to wealth to be small and statistically insignificant, supporting the CRRA assumption; this finding is robust when the sample is restricted to households experiencing ‘large’ income variations. Various extensions are discussed.-

Conférence François-Albert-Angers 2004 : Modèle collectif et analyse de bien-être

Dans cet article, on étudie en quoi l’introduction d’une approche collective modifie les analyses de bien-être classiques en théorie du consommateur. Après avoir défini et caractérisé les principaux concepts, on décrit deux logiques possibles, celle de la « compensation potentielle » et celle de la « compensation effective ». On discute ensuite de leurs implications.In this article, we study how the introduction of a collective approach modifies standard welfare analysis of consumer theory. We first define and characterize the main concepts at stake. Then the two basic logics – “potential compensation” and “actual compensation” – are described, and their implications are discussed

Collective and Unitary Models: a Clarification

No abstractunitary; collective; intrahousehold allocation; distribution factors; demand

Household Labor Supply, Sharing Rule and the Marriage Market

In this paper we estimate a model of household labor supply based on the collective approach developed by Chiappori (JPE, 1992). This approach assumes that the intra-household decision process leads to Pareto efficient outcomes. Our model extends this theory by allowing the marriage market, and especially the sex ratio, to affect the sharing rule and the household labor supplies. We show that our model imposes new restrictions on the parameters of the labor supply functions. Also, individual preferences and the sharing rule are recovered using an identification procedure that is both simpler and more robust than in Chiappori's initial approach. The model is estimated using PSID data for the year 1988. Our results do not reject the restrictions imposed by the model. Moreover, the sex ratio influences the sharing rule and the labor supply behavior in the directions predicted by the theory. Finally, the impact of individual wage rates suggests that spouses behave in an altruistic manner within the household.

Distributional Effects in Household Models: Separate Spheres and Income Pooling

We derive distributional effects for a non-cooperative alternative to the unitary model of household behaviour. We consider the Nash equilibria of a voluntary contributions to public goods game. Our main result is that, in general, the two partners either choose to contribute to different public goods or they contribute to at most one common good. The former case corresponds to the separate spheres case of Lundberg and Pollak (1993). The second outcome yields (local) income pooling. A household will be in different regimes depending on the distribution of income within the household. Any bargaining model with this non-cooperative case as a breakdown point will inherit the local income pooling. We conclude that targetting benefits such as child benefits to one household member may not always have an effect on outcomes.Nash equilibrium; Nash bargaining; collective models; intra-household allocation; local income pooling; separate spheres

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 equivalence scales, consumption economies of scale, household members’ bargaining power and other related concepts.consumer demand; collective model; adult equivalence scales; household bargaining; economies of scale; demand systems; bargaining power; Barten scales