The Family Under the Microscope: An Experiment Testing Economic Models of Household Choice

37 Pages Posted: 30 May 2008

See all articles by Alistair Munro

Alistair Munro

National Graduate Institute for Policy Studies (GRIPS); University of London, Royal Holloway College - Department of Economics

Ian J. Bateman

University of East Anglia (UEA) - School of Economic and Social Studies

Tara McNally

Government of the United Kingdom - Health and Safety Executive (HSE)

Date Written: May 25, 2008

Abstract

We devise and execute three experiments to test key features of models of household decision-making. Using established couples (married and unmarried) we test income pooling, unanimity and Pareto efficiency. Subjects make choices individually and jointly and are asked to make predictions about their partner's choices. Unanimity is rejected. Income pooling is not rejected in joint choice but has less explanatory power in individual choice. In direct tests both sexes do not pool income completely, but in econometric tests across all tasks, women place an equal weight on payoffs but men discount their partner's payoffs by between 15 and 20%. We find that transparency has little impact on deviations from income pooling or indeed on behaviour generally. Many joint choices deviate from the Pareto principle in a systematic manner suggesting that choices made as a couple are more risk averse than individual decisions.

Keywords: experiment, household, unitary, income pooling, Pareto, family

JEL Classification: C92, D13, D80

Suggested Citation

Munro, Alistair and Bateman, Ian Julian and McNally, Tara, The Family Under the Microscope: An Experiment Testing Economic Models of Household Choice (May 25, 2008). Available at SSRN: https://ssrn.com/abstract=1138969 or http://dx.doi.org/10.2139/ssrn.1138969

Alistair Munro (Contact Author)

National Graduate Institute for Policy Studies (GRIPS) ( email )

Tokyo
Japan

HOME PAGE: http://www.grips.ac.jp/

University of London, Royal Holloway College - Department of Economics ( email )

Royal Holloway College
Egham
Surrey, Surrey TW20 0EX
United Kingdom

Ian Julian Bateman

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

Tara McNally

Government of the United Kingdom - Health and Safety Executive (HSE) ( email )

United Kingdom

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