Marital Matching, Economies of Scale, and Intrahousehold Allocations

TY - JOUR

T1 - Marital Matching, Economies of Scale, and Intrahousehold Allocations

AU - Cherchye, Laurens

AU - De Rock, Bram

AU - Surana, Khushboo

AU - Vermeulen, Frederic

PY - 2020/10/19

Y1 - 2020/10/19

N2 - We propose a novel nonparametric method to empirically identify economies of scale in multiperson household consumption. We assume consumption technologies that define the public and private nature of expenditures through Barten scales. Our method (solely) exploits preference information revealed by a cross-section of household observations while accounting for fully unobserved preference heterogeneity. An application to data drawn from the US Panel Study of Income Dynamic shows that the method yields informative results on scale economies and intrahousehold allocation patterns. In addition, it allows us to define individual compensation schemes required to preserve the same consumption level in case of marriage dissolution or spousal death.

AB - We propose a novel nonparametric method to empirically identify economies of scale in multiperson household consumption. We assume consumption technologies that define the public and private nature of expenditures through Barten scales. Our method (solely) exploits preference information revealed by a cross-section of household observations while accounting for fully unobserved preference heterogeneity. An application to data drawn from the US Panel Study of Income Dynamic shows that the method yields informative results on scale economies and intrahousehold allocation patterns. In addition, it allows us to define individual compensation schemes required to preserve the same consumption level in case of marriage dissolution or spousal death.

U2 - 10.1162/rest_a_00829

DO - 10.1162/rest_a_00829

M3 - Article

SN - 0034-6535

VL - 102

SP - 823

EP - 837

JO - Review of economics and statistics

JF - Review of economics and statistics

IS - 4

ER -