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

44 Pages Posted: 11 Oct 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; Partnership for Economic Policy (PEP)

Multiple version iconThere are 3 versions of this paper

Date Written: October 11, 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 Örst 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 ëobservedíresource 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 Öt 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 acad- emic 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 (October 11, 2018). Partnership for Economic Policy Working Paper No. 2018-06. Available at SSRN: https://ssrn.com/abstract=3264635 or http://dx.doi.org/10.2139/ssrn.3264635

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

Partnership for Economic Policy (PEP)

P.O. Box 30772-00100
ICIPE - Duduville Campus, Kasarani
Nairobi
Kenya

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