The Revealed Preference Approach to Collective Consumption Behavior: Nonparametric Testing and Sharing Rule Recovery

CentER Discussion Paper Series No. 2009-68 (Revision of 2007-73)

37 Pages Posted: 10 Sep 2009

See all articles by L. Cherchye

L. Cherchye

KU Leuven; Erasmus Research Institute of Management (ERIM)

Bram De Rock

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Frederic Vermeulen

Tilburg University - CentER; IZA Institute of Labor Economics

Date Written: July 31, 2009

Abstract

We present a nonparametric revealed preference methodology for empirically analyzing collective consumption behavior. First, we introduce an integer programming (IP) methodology for testing data consistency with collective consumption models that account for publicly as well as privately consumed goods.

This IP methodology can include information on assignable quantities.for private goods. Next, we show that the IP methodology allows for recovering the personalized (Lindahl) prices for the public goods and the personalized quantities for the private goods. In turn, this implies recovery of the sharing rule (i.e. personalized income share levels). Numerical examples and an empirical application demonstrate the practical usefulness of the methodology.

Keywords: collective model, revealed preferences, data consistency tests, recovery, integer programming, sharing rule

JEL Classification: D11, D12, D13, C14

Suggested Citation

Cherchye, Laurens and De Rock, Bram and Vermeulen, Frederic, The Revealed Preference Approach to Collective Consumption Behavior: Nonparametric Testing and Sharing Rule Recovery (July 31, 2009). CentER Discussion Paper Series No. 2009-68 (Revision of 2007-73), Available at SSRN: https://ssrn.com/abstract=1471182 or http://dx.doi.org/10.2139/ssrn.1471182

Laurens Cherchye (Contact Author)

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant
Belgium

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Bram De Rock

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Av. F. D. Roosevelt, 50
CP 114
Brussels, B-1050
Belgium

Frederic Vermeulen

Tilburg University - CentER ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 3196 (Phone)

HOME PAGE: http://center.uvt.nl/staff/vermeulen/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
26
Abstract Views
590
PlumX Metrics