Valérie Lechene

Distributional Effects in Household Models: Separate Spheres and Income Pooling

We derive distributional effects for a non-cooperative alternative to the unitary model of household behaviour. We consider the Nash equilibria of a voluntary contributions to public goods game. Our main result is that, in general, the two partners either choose to contribute to different public goods or they contribute to at most one common good. The former case corresponds to the separate spheres case of Lundberg and Pollak (1993). The second outcome yields (local) income pooling. A household will be in different regimes depending on the distribution of income within the household. Any bargaining model with this non-cooperative case as a breakdown point will inherit the local income pooling. We conclude that targeting benefits such as child benefits to one household member may not always have an effect on outcomes.

Efficient Responses to Targeted Cash Transfers

We estimate and test the restrictions of a collective model of household consumption, using z-conditional demands, in the context of a large conditional cash transfer program in rural Mexico. The model can explain the impacts of the program on the structure of food consumption. We use two plausible and novel distribution factors: the random allocation of a cash transfer to women and the relative size and wealth of the husband’s and wife’s family networks. Our structure does better at predicting the effect of exogenous increases in household income than an alternative, unitary, structure. We cannot reject efficiency of household decisions.

Noncooperative household demand

We study noncooperative household models with two agents and several voluntarily contributed public goods, deriving the counterpart to the Slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true Slutsky matrix in the unitary model. We provide results characterising both cases in which there are and are not jointly contributed public goods. Demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives and the noncooperative model against a general alternative.

Smoking and Endogenous Mortality: Does Heterogeneity in Life Expectancy Explain Differences in Smoking Behavior?

This paper proposes a joint model of tobacco consumption and mortality over the life-cycle. The decision to smoke is a trade off between current utility derived from smoking and a mortality risk increasing with age. Individuals with a longer potential life expectancy have more incentive to cut back on smoking and thus self select out of smoking. Using detailed data on mortality, morbidity and smoking we are able to identify this selection effect. We empirically evaluate its importance in explaining heterogeneity in smoking behaviour among adults. We find that heterogeneity in potential life expectancy explains part of the heterogeneity in smoking behaviour, even when conditioning on sex, education and occupation and information on other risky behaviour. When we embed heterogeneous potential life expectancies within a rational addiction model of smoking, we find that the model is able to match the life cycle profiles of smoking.

Health Selection and the Effect of Smoking on Mortality

We show that individuals who are in poorer health, independently from smoking, are more likely to start smoking and to smoke more cigarettes than those with better non-smoking health. We present evidence of selection, relying on extensive data on morbidity and mortality. We show that health based selection into smoking has increased over the last fifty years with knowledge of its health effects. We show that the effect of smoking on mortality is higher for high educated individuals and for individuals in good non-smoking health.