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 method is that it builds on a revealed preference characterization of the collective model that is intrinsically non-parametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intra-household 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 a simulation analysis and an empirical application to labor supply data.
Original language | English |
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Pages (from-to) | 98-114 |
Number of pages | 16 |
Journal | Journal of Public Economics |
Volume | 166 |
DOIs | |
Publication status | Published - 1 Oct 2018 |
Keywords
- collective model
- identification
- individual welfare
- labor supply
- money metric welfare index
- revealed preferences
- sharing rule