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This paper exploits the experimental set-up of the cash transfer program PROGRESA in rural Mexico to estimate a collective model of the household in order to investigate how parents allocate household resources. We show that household decisions are compatible with the collective model at the beginning of the program, but reject it later on. This shows that second order effects of cash transfer programs are important and suggests we need richer structural models to thoroughly analyse these policy interventions. We end this paper by proposing such a simple and tractable model of household behaviour, where decision makers may have misaligned preferences as a result of the treatment about the importance of a public good. ; info:eu-repo/semantics/published

AbstractWe propose a novel approach to model joint consumption decisions of individuals who care for each other. The model encompasses a continuum of group consumption models situated between the fully co-operative model and the non-cooperative model without caring. We also define a measure for the degree of intragroup cooperation that quantifies how close the observed group behaviour is to fully co-operative behaviour. Following a revealed preference approach, we derive testable implications of the model for empirical data. We use our model to analyse decisions made by children in an experimental setting.

We develop a novel framework to analyze the structural implications of the marriage market for household consumption. We define a revealed preference characterization of efficient household consumption when the marriage is stable. We characterize stable marriage with intrahousehold (consumption) transfers but without assuming transferable utility. Our revealed preference characterization generates testable conditions even with a single observation per household and heterogeneous individual preferences across households. The characterization also allows for identifying the intrahousehold decision structure (including the sharing rule) under the same minimalistic assumptions. An application to Dutch household data illustrates the usefulness of our theoretical results. (JEL D60, D63, H21, H23, I38)

We develop a revealed preference methodology that allows us to explore whether time inconsistencies in household choice are the product of individual preference nonstationarities or the result of individual heterogeneity and renegotiation within the household. An empirical application to household-level microdata highlights that an explicit recognition of the collective nature of household choice enables the observed behavior to be rationalized by a theory that assumes preference stationarity at the individual level. The methodology created in this paper also facilitates the recovery of theory-consistent discount rates for each individual within particular household under study. (JEL E24, F13, F16)