The Collective Model of Household Consumption: A Nonparametric Characterization

CentER Discussion Paper No. 2004-76

38 Pages Posted: 5 Jan 2005

See all articles by L. Cherchye

L. Cherchye

KU Leuven; Erasmus Research Institute of Management (ERIM)

Bram de Rock

Katholieke Universiteit Leuven - Campus Kortrijk (KULAK) - Subfaculty of Economics and Applied Economics

Frederic Vermeulen

Tilburg University - CentER; IZA Institute of Labor Economics

Date Written: September 2004

Abstract

We provide a nonparametric characterization of a general collective model for multi-person household consumption, which includes externalities and public goods. We derive the minimum number of commodities and observations that enable the falsification of this general model for aggregrate household quantity and price data; these requirements are generally less stringent than the conditions derived by Browning and Chiappori (1998) within a parametric setting. Next, we institute necessary and sufficient conditions for data consistency with collective rationality that only include observed price and quantity information. These conditions are formally similar to the GARP condition for the unitary model (see Varian, 1982); which is particularly convenient from a practical point of view. To illustrate the generality of the collective model, we also discuss a number of interesting special cases, including the traditional unitary model and the collective labor supply a la Chiappori (1988).

Keywords: Household economics, consumption, allocation, preferences

JEL Classification: D11, D12, C14

Suggested Citation

Cherchye, Laurens and de Rock, Bram and Vermeulen, Frederic, The Collective Model of Household Consumption: A Nonparametric Characterization (September 2004). CentER Discussion Paper No. 2004-76, Available at SSRN: https://ssrn.com/abstract=607022 or http://dx.doi.org/10.2139/ssrn.607022

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

Katholieke Universiteit Leuven - Campus Kortrijk (KULAK) - Subfaculty of Economics and Applied Economics ( email )

Etienne Sabbelaan 53
Kortrijk, B-8500
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

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