The Collective Model of Household Consumption: A Nonparametric Characterization

  1. Laurens Cherchye1,
  2. Bram De Rock2,
  3. Frederic Vermeulen3,†

Article first published online: 28 FEB 2007

DOI: 10.1111/j.1468-0262.2006.00757.x

Issue

Econometrica

Econometrica

Volume 75, Issue 2, pages 553–574, March 2007

Additional Information

How to Cite

Cherchye, L., De Rock, B. and Vermeulen, F. (2007), The Collective Model of Household Consumption: A Nonparametric Characterization. Econometrica, 75: 553–574. doi: 10.1111/j.1468-0262.2006.00757.x

Author Information

  1. 1

    Center for Economic Studies, Catholic University of Leuven, Etienne Sabbelaan 53, B-8500 Kortrijk, Belgium, and Fund for Scientific Research—Flanders, Vlaanderen, Belgium; laurens.cherchye@kuleuven-kortrijk.be,

  2. 2

    Dept. of Mathematics and Center for Economic Studies, Catholic University of Leuven, Etienne Sabbelaan 53, B-8500 Kortrijk, Belgium; bram.derock@kuleuven-kortrijk.be,

  3. 3

    CentER and Netspar, Tilburg University, P.O. Box 90153, NL-5000 LE Tilburg, The Netherlands; frederic.vermeulen@uvt.nl

  1. †

    We are grateful to a co-editor, three anonymous referees, Denis Beninger, Geert Dhaene, and Olivier Donni for helpful comments and suggestions, which substantially improved the paper. We also thank seminar participants in Leuven, Mannheim, Paris, Tilburg, Turin, and the Econometric Society World Congress 2005 in London for useful discussions. Finally, we want to thank Martin Browning for inspiring conversations, which formed an important motivation for this study. The usual disclaimer applies. Frederic Vermeulen acknowledges the financial support provided through the European Community's Human Potential Programme under contract HPRN-CT-2002-00235 (AGE).

Publication History

  1. Issue published online: 28 FEB 2007
  2. Article first published online: 28 FEB 2007
  3. Manuscript received October, 2004; final revision received November, 2006.

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Keywords:

  • Collective household models;
  • intrahousehold allocation;
  • revealed preferences;
  • nonparametric analysis

We provide a nonparametric characterization of a general collective model for household consumption, which includes externalities and public consumption. Next, we establish testable necessary and sufficient conditions for data consistency with collective rationality that only include observed price and quantity information. These conditions have a similar structure as the generalized axiom of revealed preference for the unitary model, which is convenient from a testing point of view. In addition, we derive the minimum number of goods and observations that enable the rejection of collectively rational household behavior.

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