Open AccessCollective household welfare and intra‐household inequality
Author(s) -
Chavas JeanPaul,
Me Martina,
Pagani Elisa,
Perali Federico
Publication year - 2018
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te2459
Subject(s) - economics , household income , consumption (sociology) , inequality , welfare , context (archaeology) , pareto principle , distribution (mathematics) , lorenz curve , econometrics , economic inequality , income distribution , income shares , gini coefficient , mathematics , geography , mathematical analysis , market economy , social science , operations management , archaeology , sociology
We investigate the relationship between the individual and household indirect utility functions in the context of a collective household model. Our analysis produces new results that explain how the rule governing the distribution of resources among household members is related to the measurement of household welfare and intra‐household inequality. We show that in a collective model of private consumption, income shares are equal to the product of two weights: the Pareto weight and a distribution weight reflecting income effects across individuals. For a weighted Bergsonian representation of household utility and general assumptions about individual preferences, we derive the associated household welfare functions and intra‐household inequality measures belonging to a family of entropy indexes. We illustrate our findings with an empirical application that estimates a collective demand system to recover associated individual and household welfare functions along with the measures of intra‐household inequality. This is the first application that estimates the Pareto weight and examines its role within a measure of income dispersion among household members.