Household Composition and Preferences: A Collective Approach to Household Consumption

Abstract

This paper tests whether preferences over bundles of market goods are different for single persons and members of couples. We use a collective model which incorporates economies of scale in consumption. Detailed individual consumption data enable us to estimate a model that allows individual preferences for some goods to depend on household composition. The hypothesis that singles and couple members of the same gender have the same preferences is rejected. This suggests that preferences may change when household composition changes. We produce indifference scales for members of couples and a refined poverty line measure for couples. Indifference scales for women and men are respectively 81 and 59 percent of their household’s expenditure. These measures are highly sensitive to the preference equality assumption.