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Publication Details

02 Oct 18

Individual welfare analysis for collective households.

Authors: CHERCHYE Laurens, COSAERT Sam, DE ROCK Bram, KERSTENS Pieter Jan, VERMEULEN Frederic.

DOI: http://doi.org/10.1016/j.jpubeco.2018.08.012

Abstract:

We propose novel tools for the analysis of individual welfare on the basis of aggregate household demand behavior. The method assumes a collective model of household consumption with the public and private nature of goods specified by the empirical analyst. A main distinguishing feature of our method is that it builds on a revealed preference characterization of the collective model that is intrinsically non-parametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intra-household sharing rule and the individuals' willingness-to-pay for public consumption (i.e. Lindahl prices). The method is easy to use in practice and yields informative empirical results, which we demonstrate through a simulation analysis and an empirical application to labor supply data.

Reference: CHERCHYE Laurens, COSAERT Sam, DE ROCK Bram, KERSTENS Pieter Jan, VERMEULEN Frederic. Individual welfare analysis for collective households. Journal of Public Economics, 2018, vol. 166, pp. 98-114.

Keywords:
individual welfare,
collective model,
revealed preferences,
sharing rule,
money metric welfare index,
identification,
labor supply

Project: Nonparametric analysis of household consumption, labour supply and welfare

Linked publications
COSAERT Sam.
American Economic Journal: Microeconomics, 2018, vol. 10, n°2, pp. 83-117.
COSAERT Sam, DEMUYNCK Thomas.
Review of Economics and Statistics, 2018, vol. 100, n°2, pp. 349-361.
BRUYNEEL Sabrina, CHERCHYE Laurens, COSAERT Sam, DE ROCK Bram, DEWITTE Siefgried.
Quantitative Economics, 2017, vol. 8, n°3, pp. 1037-1082.
COSAERT Sam.
Computational Economics, 2017.