Marital Stability With Committed Couples: A Revealed Preference Analysis

TL;DR

This paper develops a revealed preference framework to analyze marital stability and household consumption patterns, highlighting the importance of price variation in identifying resource allocations among committed and non-committed couples.

Contribution

It introduces a novel theoretical approach to characterize marital stability and demonstrates how price variation enables identification of household consumption for both committed and non-committed couples.

Findings

Price variation is crucial for identifying consumption patterns.

Theoretical insights into intrahousehold resource allocation.

Simulations support the importance of price variation in empirical analysis.

Abstract

We present a revealed preference characterization of marital stability where some couples are committed. A couple is committed if they can divorce only with mutual consent. We provide theoretical insights into the potential of the characterization for identifying intrahousehold consumption patterns. We demonstrate that without price variation for private goods among potential couples, intrahousehold resource allocations can only be identified for non-committed couples. We conduct simulations using Dutch household data to support our theoretical findings. Our results show that with price variation, the empirical implications of marital stability allow for the identification of household consumption allocations for both committed and non-committed couples.