Econometrica: Mar 2007, Volume 75, Issue 2
The Collective Model of Household Consumption: A Nonparametric Characterization
Laurens Cherchye, Bram De Rock, Frederic VermeulenWe provide a nonparametric characterization of a general collective model for household consumption, which includes externalities and public consumption. Next, we establish testable necessary and sufficient conditions for data consistency with collective rationality that only include observed price and quantity information. These conditions have a similar structure as the generalized axiom of revealed preference for the unitary model, which is convenient from a testing point of view. In addition, we derive the minimum number of goods and observations that enable the rejection of collectively rational household behavior.
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