A Sharing Model of the Household: Explaining the Deaton-Paxson Paradox and Computing Household Indifference Scales

Federico H. Gutierrez

No 166, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: This paper presents a new model of the household that is able to explain a variety of consumption patterns that existing models cannot describe, most notably, those associated with the Deaton and Paxson (1998) paradox. The most distinctive feature of this model is the presence of common-pool goods (rival and non-excludable) previously ignored in the literature. Under regularity conditions, the model can be interpreted as a hybrid between non-cooperative and a collective models of the household. Empirically, the paper revisits the Deaton-Paxson paradox exploiting household splits in longitudinal data and computes the elusive indifference scales coefficients.

Keywords: sharing model; collective model; intra-household allocation; Deaton-Paxson paradox; household economies of scale; indifference scales (search for similar items in EconPapers)
JEL-codes: D13 J12 O15 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-dem and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:166

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