Reference : Confronting the Representative Consumer with Household-Size Heterogeneity
Reports : External report
Business & economic sciences : General economics & history of economic thought
http://hdl.handle.net/10993/12214
Confronting the Representative Consumer with Household-Size Heterogeneity
English
Koulovatianos, Christos mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Schroeder, Carsten [> >]
Schmidt, Ulrich [> >]
2010
DIW
1056
[en] Linear Aggregation; Equivalent Expenditures; Survey Method; Household-Size Economies;
[en] Much analysis in macroeconomics empirically addresses economy-wide incentives behind consumer/investment choices by using insights from the way a single representative household would behave. Heterogeneity at the micro level can jeopardize attempts to back up the representative consumer construct with microfoundations. One complex aspect of micro-level heterogeneity is household size, as individuals living in multi-member households have the potential to share goods within the household, benefiting from household-size economies. Theoretically, we show that validating the role of a representative consumer would require that the way individuals benefit from intra-household sharing is strictly aligned across the rich and the poor: once expenditures for subsistence needs are subtracted from disposable household income, household-size economies the remainder (discretionary) household incomes entail must be the same across the rich and the poor. We have designed a survey method that allows the testing of this stringent property of intra-household sharing and find that it holds.
http://hdl.handle.net/10993/12214
http://www.diw.de/documents/publikationen/73/diw_01.c.361227.de/dp1056.pdf

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