Estimating consumption economies of scale, adult equivalence scales, and household bargaining power

Working paper

How much income would a woman living alone require to attain the same standard of living that she would have if she were married? What percentage of a married couple's expenditures are controlled by the husband? How much money does a couple save on consumption goods by living together versus living apart? We propose and estimate a collective model of household behavior that permits identification and estimation of concepts such as these. We model households in terms of the utility functions of its members, a bargaining or social welfare function, and a consumption technology function. We demonstrate generic nonparametric identification of the model, and hence of a version of adult equivalence scales that we call indifference scales, as well as consumption economies of scale, the household's resource sharing rule or members' bargaining power, and other related concepts.

Authors: Browning, M; Chiappori, P; Lewbel, A

• Publication status: Published
• Publisher: University of Oxford
• Series: Department of Economics Discussion Paper Series
• Publication date: 2006-10-01
• Paper number: 289
• Keywords: adult eqivalence scales; bargaining power; consumer demand; indifference scales; Barten scales; household bargaining; sharing rule; collective model; demand systems; economies of scale; nonparametric identification