The Intrahousehold Allocation of Private and Public Consumption: Theory and Evidence from U.S. Data
45 Pages Posted: 24 May 2006
Date Written: May 2006
Abstract
We adopt the collective approach to consumer behavior with egoistic agents, and assume that the household consumption is either private or public. We then show that (i) household demands have to satisfy testable constraints and (ii) some elements of the decision process can be retrieved from observed behavior. These results are based on a conditional demand ("m-demand") framework in which household demands are directly derived from the marginal rates of substitution. Finally, we present an empirical application using the U.S. Consumer Expenditure Survey. Overall, the data turn out to be consistent with the theoretical model.
Keywords: collective decision, intra-household distribution, demand analysis, private
JEL Classification: D11, D12, H41
Suggested Citation: Suggested Citation