How Falsifiable Is Collective Rationality?

CRREP Working Paper Series 2018-04

58 Pages Posted: 20 May 2018  

Anyck Dauphin

Université du Quebec en Outaouais (UQO)

Bernard Fortin

Laval University - Département d'Économique; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Guy Lacroix

Laval University - Département d'Économique; IZA Institute of Labor Economics

Date Written: March 1, 2018

Abstract

Collective rationality is seldom if ever rejected in the literature, raising doubt about its falsifiability. We show that the standard approach to test the collective model with distribution factors may yield misleading inference. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision-makers (e.g., polygamous households, adult children). We provide a brief and informal meta-analysis that suggests that much of the evidence in favour of collective rationality in the empirical literature appears to be inconsistent with our test. We illustrate the latter using data from a survey we have conducted in Burkina Faso. Collective rationality within monogamous households is not rejected using the standard testing procedure while it is clearly rejected using our proposed test procedure. Furthermore, our test also rejects collective rationality for bigamou households. We conclude that the household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.

Keywords: Collective Model, Distribution Factors, Rationality, Efficiency, Polygamy

JEL Classification: D1, D7, J12

Suggested Citation

Dauphin, Anyck and Fortin, Bernard and Lacroix, Guy, How Falsifiable Is Collective Rationality? (March 1, 2018). CRREP Working Paper Series 2018-04. Available at SSRN: https://ssrn.com/abstract=3175379 or http://dx.doi.org/10.2139/ssrn.3175379

Anyck Dauphin (Contact Author)

Université du Quebec en Outaouais (UQO) ( email )

Case postale 1250
succursale Hull
Gatineau, Québec J8X 3X7
Canada

Bernard Fortin

Laval University - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-5678 (Phone)
418-656-7798 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Guy Lacroix

Laval University - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-2024 (Phone)
418-656-7798 (Fax)

IZA Institute of Labor Economics

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

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