Validating the Collective Model of Household Consumption Using Direct Evidence on Sharing

CRREP working paper serie 2018-10

44 Pages Posted: 10 Jul 2018 Last revised: 8 Aug 2018

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Guy Lacroix

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

Luca Tiberti

Université Laval

Multiple version iconThere are 3 versions of this paper

Date Written: July 1, 2018

Abstract

Recent advances in the collective model literature suggest ways to estimate the complete allocation of resources within households, using assignable goods and assuming adult preference similarity across demographic groups (or across spouses). While it makes welfare analysis at the individual level possible, the predictive power of the model is unknown. We propose the first validation of this approach, exploiting a unique dataset from Bangladesh in which the detailed expenditure on private goods by each family member is collected. Individualized expenditure allows us to test the identifying assumptions and to derive observed resource sharing within families, which can be compared to the resource allocation predicted by the model. Sharing between parents and children is well predicted on average while the model detects key aspects like the extent of pro-boy discrimination. Results overall depend on the identifying good: clothing provides the best fit compared to other goods as it best validates the preference-similarity assumption. The model leads to accurate measures of child and adult poverty, indicating the size and direction of the mistakes made when using the traditional approach based on per adult equivalent expenditure (i.e. ignoring within-household inequality). This assessment of existing approaches to measure individual inequality and poverty is crucial for both academic and policy circles and militates in favor of a systematic use of collective models for welfare analyses.

Keywords: Collective Model, Engel Curves, Rothbarth Method, Sharing rule.

JEL Classification: D11, D12, D36, I31, J12

Suggested Citation

Bargain, Olivier and Lacroix, Guy and Tiberti, Luca, Validating the Collective Model of Household Consumption Using Direct Evidence on Sharing (July 1, 2018). CRREP working paper serie 2018-10. Available at SSRN: https://ssrn.com/abstract=3211354 or http://dx.doi.org/10.2139/ssrn.3211354

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

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

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland
+353 1 716 8357 (Phone)
+353 1 283 0068 (Fax)

HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm

Guy Lacroix

Université Laval - 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

Luca Tiberti

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
24
Abstract Views
167
PlumX Metrics