How falsifiable is collective rationality ?

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14 Mars 2018
Types de publication: 
Cahier de recherche
Anyck Dauphin
Bernard Fortin
Guy Lacroix
Axe de recherche: 
Enjeux économiques et financiers
Collective model
Distribution Factors
Classification JEL: 

Collective rationality is seldom if ever rejected in the literature, raising doubt about its falsifiability. We show that the standard approach to test the collective model with distribution factors may yield misleading inference. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision-makers (e.g., polygamous households, adult children). We provide a brief and informal meta-analysis that suggests that much of the evidence in favour of collective rationality in the empirical literature appears to be inconsistent with our test. We illustrate the latter using data from a survey we have conducted in Burkina Faso. Collective rationality within monogamous households is not rejected using the standard testing procedure while it is clearly rejected using our proposed test procedure. Furthermore, our test also rejects collective rationality for bigamou households. We conclude that the household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.


Anyck Dauphin : Université du Québec en Outaouais and CDESG

Bernard Fortin : Department of economics, Université Laval, CRREP and CIRANO

Guy Lacroix : Department of economics, Université Laval, CRREP and CIRANO