'Individual' versus 'Household' in Recreational Demand Models

This study proposes a novel approach to estimating a recreational demand model that accounts for intra-household resource allocation. The technique is based on an analogy borrowed from the literature of collective household behavior and, in particular, on Browning, Chiappori and Lewbel (2006)’s model. We formulate a collective recreational demand model that takes into account the role of each member’s preferences for consumption choices and that depends on how disposable income is divided within the household. This model identifies the Consumer Surplus for each household member and the allocation of resources within a household by a consumption technology function, which summarizes all of the technological economies of scale and scope that result from living together, and by using information about the consumption of individuals living alone as if they were living in a household. Finally, we show that husbands and wives have significantly different recreational demands. This implies that observations for husbands and wives may not be treated as identical as in the traditional recreational demand model (unless one spouse is the dictator) and that the collective setting is a plausible next step to take in the analysis of recreational demand models.

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 Record created 2017-04-01, last modified 2018-01-22

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