Confronting the Robinson Crusoe paradigm with household-size heterogeneity

  • Modern macroeconomics empirically addresses economy-wide incentives behind economic actions by using insights from the way a single representative household would behave. This analytical approach requires that incentives of the poor and the rich are strictly aligned. In empirical analysis a challenging complication is that consumer and income data are typically available at the household level, and individuals living in multimember households have the potential to share goods within the household. The analytical approach of modern macroeconomics would require that intra-household sharing is also strictly aligned across the rich and the poor. Here we have designed a survey method that allows the testing of this stringent property of intra-household sharing and find that it holds: once expenditures for basic needs are subtracted from disposable household income, household-size economies implied by the remainder household incomes are the same for the rich and the poor.

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Author:Christos Koulovatianos, Carsten Schröder, Ulrich Schmidt
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2008,24
Series (Serial Number):CFS working paper series (2008, 24)
Document Type:Working Paper
Year of Completion:2008
Year of first Publication:2008
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2008/08/15
Tag:Equivalence Scales; Household-Size Economies; Linear Aggregation; Representative Consumer; Survey Method
GND Keyword:Haushalt; Einkommen; Anreiz
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:C Mathematical and Quantitative Methods / C4 Econometric and Statistical Methods: Special Topics / C42 Classificaton Discontinued 2008. See C83.
Licence (German):License LogoDeutsches Urheberrecht