Economics of the Household: Where Do We Stand? Society of Economics - PowerPoint PPT Presentation

Economics of the Household: Where Do We Stand? Society of Economics of the Household Annual Meeting Pierre-André Chiappori Columbia University PSE, May 2018 Chiappori (Columbia University) Economics of the Household PSE, May 2018 1 / 10

Economics of the household: back to the future Founding father: Gary Becker → lots of works in the 60s, 70s Chiappori (Columbia University) Economics of the Household PSE, May 2018 2 / 10

Economics of the household: back to the future Founding father: Gary Becker → lots of works in the 60s, 70s Late 80s - early 90s: a revival Chiappori (Columbia University) Economics of the Household PSE, May 2018 2 / 10

Economics of the household: back to the future Founding father: Gary Becker → lots of works in the 60s, 70s Late 80s - early 90s: a revival New ‘non unitary’ approaches (non cooperative, collective,...) Chiappori (Columbia University) Economics of the Household PSE, May 2018 2 / 10

Economics of the household: back to the future Founding father: Gary Becker → lots of works in the 60s, 70s Late 80s - early 90s: a revival New ‘non unitary’ approaches (non cooperative, collective,...) New data sets Chiappori (Columbia University) Economics of the Household PSE, May 2018 2 / 10

Economics of the household: back to the future Founding father: Gary Becker → lots of works in the 60s, 70s Late 80s - early 90s: a revival New ‘non unitary’ approaches (non cooperative, collective,...) New data sets New empirical works Chiappori (Columbia University) Economics of the Household PSE, May 2018 2 / 10

Economics of the household: back to the future Founding father: Gary Becker → lots of works in the 60s, 70s Late 80s - early 90s: a revival New ‘non unitary’ approaches (non cooperative, collective,...) New data sets New empirical works Recently: revival of the matching literature Chiappori (Columbia University) Economics of the Household PSE, May 2018 2 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Testability (Slutsky) Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Testability (Slutsky) Identifiability (integrability) Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Testability (Slutsky) Identifiability (integrability) Weaknesses of the unitary model Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Testability (Slutsky) Identifiability (integrability) Weaknesses of the unitary model Theory: violates methodological individualism; disregards ‘power’ Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Testability (Slutsky) Identifiability (integrability) Weaknesses of the unitary model Theory: violates methodological individualism; disregards ‘power’ Welfare: neglects intrahousehold inequality Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

The Twilight of the Unitary Model Early works: the unitary model is paramount → various justifications: Pragmatic (most of the empirical literature) � U a , U b � Samuelson (Fixed welfare index: W ) Becker: Rotten Kid Theorem → start from a criticism of Samuelson; but requires strong assumptions (in particular, TU: Bergstrom 1989) Upsides of the unitary model: based on known foundations Testability (Slutsky) Identifiability (integrability) Weaknesses of the unitary model Theory: violates methodological individualism; disregards ‘power’ Welfare: neglects intrahousehold inequality Empirics: several empirical falsifications: Slutsky (Browning Chiappori 1998, Kapan 2009, Vermeulen 2005), Income Pooling (Thomas 1990, Lundberg et al 1997, Duflo 2003, Attanasio Lechene 2014,...) Chiappori (Columbia University) Economics of the Household PSE, May 2018 3 / 10

Non Unitary Models: the Non Cooperative Approach Pioneered by Leuthold (1968), Ashworth and Ulph (1981), Bergstrom, Blume, and Varian (1986) Chiappori (Columbia University) Economics of the Household PSE, May 2018 4 / 10

Non Unitary Models: the Non Cooperative Approach Pioneered by Leuthold (1968), Ashworth and Ulph (1981), Bergstrom, Blume, and Varian (1986) More recently: Browning (2000), Chen and Woolley (2001), Del Boca and Flinn (2012, 2014), Boone et al (2014), d’Aspremont and Dos Santos Ferreira (2014, 2017), Doepke and Tertilt (2014), etc. Chiappori (Columbia University) Economics of the Household PSE, May 2018 4 / 10

Non Unitary Models: the Non Cooperative Approach Pioneered by Leuthold (1968), Ashworth and Ulph (1981), Bergstrom, Blume, and Varian (1986) More recently: Browning (2000), Chen and Woolley (2001), Del Boca and Flinn (2012, 2014), Boone et al (2014), d’Aspremont and Dos Santos Ferreira (2014, 2017), Doepke and Tertilt (2014), etc. Based on non cooperative provision of public goods Chiappori (Columbia University) Economics of the Household PSE, May 2018 4 / 10

Non Unitary Models: the Non Cooperative Approach Pioneered by Leuthold (1968), Ashworth and Ulph (1981), Bergstrom, Blume, and Varian (1986) More recently: Browning (2000), Chen and Woolley (2001), Del Boca and Flinn (2012, 2014), Boone et al (2014), d’Aspremont and Dos Santos Ferreira (2014, 2017), Doepke and Tertilt (2014), etc. Based on non cooperative provision of public goods Main problem: predictions Chiappori (Columbia University) Economics of the Household PSE, May 2018 4 / 10