Confronting the representative consumer with household-size heterogeneity

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1056

Classification and Topics

• Classification: Wirtschaft ; Classification Discontinued 2008. See C83. ; Macroeconomics: Consumption; Saving; Wealth ; Consumer Economics: Empirical Analysis ; Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts ; Consumer Economics: Theory ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Personal Income, Wealth, and Their Distributions ; Measurement and Analysis of Poverty
• Subject: Linear Aggregation ; Equivalent ; xpenditures ; SurveyMethod ; Household-Size Economies ; Gesamtwirtschaftlicher Konsum ; Konsumtheorie ; Haushaltsökonomik ; Verbraucherausgaben ; Befragung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koulovatianos, Christos ; Schröder, Carsten ; Schmidt, Ulrich
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/49420
• Last update: 10.03.2025, 11:46 AM CET