Sharing Rule Identification for General Collective Consumption Models

CentER Discussion Paper Series No. 2012-041

31 Pages Posted: 18 May 2012

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)

Arthur Lewbel

Boston College - Department of Economics

Frederic Vermeulen

Tilburg University - CentER; IZA Institute of Labor Economics

Multiple version iconThere are 3 versions of this paper

Date Written: May 16, 2012

Abstract

We propose a method to identify bounds (i.e. set identification) on the sharing rule for a general collective household consumption model. Unlike the effects of distribution factors, it is well known that the level of the sharing rule cannot be uniquely identified without strong assumptions on preferences across households of different compositions. Our new results show that, though not point identified without these assumptions, bounds on the sharing rule can still be obtained.

We get these bounds by applying revealed preference restrictions implied by the collective model to the household's continuous aggregate demand functions.

We obtain informative bounds even if nothing is known about whether each good is public, private, or assignable within the household, though having such information tightens the bounds. An empirical application demonstrates the practical usefulness of our method.

Keywords: collective model, consumer demand, revealed preferences, sharing rule, identification, bounds

JEL Classification: D11, D12, D13, C14, C30

Suggested Citation

Cherchye, Laurens and De Rock, Bram and Lewbel, Arthur and Vermeulen, Frederic, Sharing Rule Identification for General Collective Consumption Models (May 16, 2012). CentER Discussion Paper Series No. 2012-041, Available at SSRN: https://ssrn.com/abstract=2060925 or http://dx.doi.org/10.2139/ssrn.2060925

Laurens Cherchye

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

Arthur Lewbel

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3678 (Phone)
617-552-2308 (Fax)

Frederic Vermeulen (Contact Author)

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

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