The Collective Model of Household Consumption: A Nonparametric Characterization

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