Degrees of Cooperation in Household Consumption Models: A Revealed Preference Analysis

We develop a revealed preference approach to analyze non-unitary con- sumption models with intrahousehold allocations deviating from the cooper- ative (or Pareto e¢ cient) solution. At a theoretical level, we establish re- vealed preference conditions of household consumption models with varying degrees of cooperation. Using these conditions, we show independence (or non-nestedness) of the di¤erent (cooperative-noncooperative) models. At a practical level, we show that our characterization implies testable conditions for a whole spectrum of cooperative-noncooperative models that can be verified by means of mixed integer programming (MIP) methods. This MIP formula- tion is particularly attractive in view of empirical analysis. An application to data drawn from the Russia Longitudinal Monitoring Survey (RLMS) demon- strates the empirical relevance of consumption models that account for limited intrahousehold cooperation.