Income and outcomes: a structural model of intrahousehold allocation

There is evidence from several sources that one cannot treat many-person households as a single decision maker. If this is the case, then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household. A method is developed of identifying how "incomes affect outcomes' given conventional family expenditure data. The basic assumption is that household decision processes lead to efficient outcomes. A method is applied to a sample of Canadian couples with no children. The final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth. -Authors