Individual welfare analysis for collective households

Laurens Cherchye; Sam Cosaert; Bram De Rock; Pieter Jan Kerstens; Frederic Vermeulen

doi:10.1016/j.jpubeco.2018.08.012

Individual welfare analysis for collective households

Laurens Cherchye^*, Sam Cosaert, Bram De Rock, Pieter Jan Kerstens, Frederic Vermeulen

^*Corresponding author af dette arbejde

Sektion for Miljø og Naturressourcer

1 Citationer (Scopus)

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 approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold 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 both a simulation exercise and an empirical application to labor supply data drawn from the Panel Study of Income Dynamics.

Originalsprog	Engelsk
Tidsskrift	Journal of Public Economics
Vol/bind	166
Sider (fra-til)	98-114
Antal sider	17
ISSN	0047-2727
DOI	https://doi.org/10.1016/j.jpubeco.2018.08.012
Status	Udgivet - 2018

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10.1016/j.jpubeco.2018.08.012

Citationsformater

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title = "Individual welfare analysis for collective households",

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 approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold sharing rule and the individuals{\textquoteright} 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 both a simulation exercise and an empirical application to labor supply data drawn from the Panel Study of Income Dynamics.",

keywords = "Collective model, Identification, Individual welfare, Labor supply, Money metric welfare index, Revealed preferences, Sharing rule",

author = "Laurens Cherchye and Sam Cosaert and {De Rock}, Bram and Kerstens, {Pieter Jan} and Frederic Vermeulen",

year = "2018",

doi = "10.1016/j.jpubeco.2018.08.012",

language = "English",

volume = "166",

pages = "98--114",

journal = "Journal of Public Economics",

issn = "0047-2727",

publisher = "Elsevier",

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TY - JOUR

T1 - Individual welfare analysis for collective households

AU - Cherchye, Laurens

AU - Cosaert, Sam

AU - De Rock, Bram

AU - Kerstens, Pieter Jan

AU - Vermeulen, Frederic

PY - 2018

Y1 - 2018

N2 - 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 approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold 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 both a simulation exercise and an empirical application to labor supply data drawn from the Panel Study of Income Dynamics.

AB - 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 approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold 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 both a simulation exercise and an empirical application to labor supply data drawn from the Panel Study of Income Dynamics.

KW - Collective model

KW - Identification

KW - Individual welfare

KW - Labor supply

KW - Money metric welfare index

KW - Revealed preferences

KW - Sharing rule

U2 - 10.1016/j.jpubeco.2018.08.012

DO - 10.1016/j.jpubeco.2018.08.012

M3 - Journal article

AN - SCOPUS:85053310322

SN - 0047-2727

VL - 166

SP - 98

EP - 114

JO - Journal of Public Economics

JF - Journal of Public Economics

ER -

Individual welfare analysis for collective households

Abstract

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