Economic Well-Being and Poverty among the Elderly: An Analysis Based on a Collective Consumption Model

Laurens Cherchye, Bram De Rock and Frederic Vermeulen

No 3349, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We apply the collective consumption model of Browning, Chiappori and Lewbel (2006) to analyse economic well-being and poverty among the elderly. The model focuses on individual preferences, a consumption technology that captures the economies of scale of living in a couple, and a sharing rule that governs the intra-household allocation of resources. The model is applied to a time series of Dutch consumption expenditure surveys. Our empirical results indicate substantial economies of scale and a wife’s share that is increasing in total expenditures. We further calculated poverty rates by means of the collective consumption model. Collective poverty rates of widows and widowers turn out to be slightly lower than traditional ones based on a standard equivalence scale. Poverty among women (men) in elderly couples, however, seems to be heavily underestimated (overestimated) by the traditional approach. Finally, we analysed the impact of becoming a widow(er). Based on cross-sectional evidence, we find that the drop (increase) in material well-being following the husband’s death is substantial for women in high (low) expenditure couples. For men, the picture is reversed.

Keywords: indifference scales; intra-household allocation; collective model; economies of scale; poverty (search for similar items in EconPapers)
JEL-codes: D11 D12 D13 D63 I31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-02
New Economics Papers: this item is included in nep-hap
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Citations: View citations in EconPapers (9)

Published - published in: European Economic Review, 2012, 56 (6), 985-1000

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Related works:
Journal Article: Economic well-being and poverty among the elderly: An analysis based on a collective consumption model (2012)
Working Paper: Economic well-being and poverty among the elderly: an analysis based on a collective consumption model (2012)
Working Paper: Economic well-being and poverty among the elderly: an analysis based on a collective consumption model (2008)
Working Paper: Economic well-being and poverty among the elderly: an analysis based on a collective consumption model (2008)
Working Paper: Economic Well-Being and Poverty Among the Elderly: An Analysis Based on a Collective Consumption Model (2008)
Working Paper: Economic Well-Being and Poverty Among the Elderly: An Analysis Based on a Collective Consumption Model (2008)
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