Estimating a model of inefficient cooperation and consumption in collective households

Abstract

Lewbel and Pendakur (2021) propose a model of consumption inefficiency in collective households, based on "cooperation factors". We simplify that model to make it empirically tractable, and apply it to identify and estimate household member resource shares, and to measure the dollar cost of inefficient levels of cooperation. Using data from Bangladesh, we find that increased cooperation among household members yields the equivalent of a 13% gain in total expenditures, with most of the benefit of this gain going towards men.