Is consumption efficiency within households falsifiable?
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The collective household model is based upon the assumption that decision makers have achieved efficient outcomes. This paradigm, which has become one of the leading approaches in family economics, is seldom, if ever, rejected, raising doubt about its falsifiability. We show that the standard approach to test the collective model may yield misleading inferences. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision makers. We provide an informal meta-analysis that suggests that much of the evidence in favor of collective rationality in the empirical literature appears to be inconsistent with our test. We illustrate the latter using data from a survey we have conducted in Burkina Faso. Consumption efficiency within monogamous households is not rejected using the standard testing procedure while it is clearly rejected using our proposed test procedure. Furthermore, our test also rejects consumption efficiency for bigamous households. We conclude that intra-household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.
KeywordsCollective model Distribution factors Rationality Efficiency Polygamy
JEL ClassificationD1 D7 J12
We thank two anonymous referees for their valuable comments which helped improve the paper. We are grateful to Pierre-André Chiappori, Jesse Naidoo, Idrissa Diagne, Marion Goussé, Olivier Donni, Nicolas jacquemet, Carolin Pflueger, and François Portier, as well as numerous seminar participants for useful discussions and comments.
Compliance with ethical standards
Conflict of interest
The authors declare they have no conflict of interest.
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