- Open Access
Allocation of Expenditures in Elderly Households and the Cost of Widowhood
Swiss Journal of Economics and Statistics volume 153, pages371–401(2017)
Widowhood and retirement change the economie environment of elderly households. While retirement changes income and expenditure patterns, widowhood fundamentally changes the structure of the household. Besides high non-monetary cost of losing the partner, resources are no longer shared and economies of scale arising from joint consumption are lost. This paper applies a collective household model to expenditure data on elderly households in Switzerland. The findings suggest that 44% of household resources are assigned to wives and both spouses save roughly 27% or, on average, 800 Swiss Francs on monthly expenditures relative to living apart. Estimates of indifference scales indicate that men suffer a financial loss after losing their wife, while widowed women do not.
Apps, Patricia Frances, and Ray Rees (1997), “Collective Labor Supply and Household Production”, Journal of Political Economy, 105(1), pp. 178–190.
Banks, James, Richard Blundell, and Arthur Lewbel (1997), “Quadratic Engel Curves and Consumer Demand”, The Review of Economics and Statistics, 79(4), pp. 527–539.
Bargain, Olivier, and Olivier Donni (2012), “The Measurement of Child Costs: A Rothbarth-type Method Consistent with Scale Economies and Parents’ Bargaining”, European Economie Review, 56(4), pp. 792–813.
Bourguignon, Francois, Martin Browning, Pierre-André Chiappori, and Valérie Lechene (1993), “Intra Household Allocation of Consumption: A model and Some Evidence from French Data”, Annals of Economies and Statistics I Annales diLconomie et de Statistique, (29), pp. 137–156.
Browning, Martin, Francois Bourguignon, Pierre-André Chiapuppori, and Valérie Lechene (1994), “Income and Outcomes: A Structural Model of Intrahousehold Allocation”, Journal of Political Economy, 102(6), pp. 1067–1096.
Browning, Martin, and Pierre-André Chiappori (1998), “Efficiënt Intra-Household Allocations: A General Characterization and Empirical Tests”, Econometrica, 66(6), pp. 1241–1278.
Browning, Martin, Pierre-André Chiappori, and Arthur Lewbel (2013), “Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power”, Review of Economie Studies, 80(4), pp. 1267–1303.
Bütikofer, Aline, and Michael Gerfin (2017), “The Economies of Scale of Living Together and how They Are Shared: Estimates Based on a Collective Household Model”, Review of Economies of the Household, 15(2), pp. 433–453.
Bütikofer, Aline, Arthur Lewbel, and Shannon Seitz (2011), “Health and Retirement Effects in a Collective Consumption Model of Older Households”, Boston College Working Papers in Economies.
Cherchye, Laurens, Bram De Rock, Arthur Lewbel, and Frederic Verupmeulen (2015), “Sharing Rule Identification for General Collective Consumption Models”, Econometrica, 83(5), pp. 2001–2041.
Cherchye, Laurens, Bram De Rock, and Frederic Vermeulen (2011), “The Revealed Preference Approach to Collective Consumption Behaviour: Testing and Sharing Rule Recovery”, The Review of Economie Studies, 78(1), pp. 176–198.
Cherchye, Laurens, Bram De Rock, and Frederic Vermeulen (2012), “Economie Well-Being and Poverty among the Elderly: An Analysis Based on a Collective Consumption Model”, European Economie Review, 56(6), pp. 985–1000.
Cherchye, Laurens, Thomas Demuynck, and Bram De Rock (2011), “Revealed Preference Analysis of Non-Cooperative Household Consumption”, The Economie Journal, 121(555), pp. 1073–1096.
Chiappori, Pierre-André (1988), “Nash-Bargained Households Decisions: A Comment”, International Economie Review, 29(4), pp. 791–796.
Chiappori, Pierre-André (1992), “Collective Labor Supply and Welfare”, Journal of Political Economy, 100(3), pp. 437–467.
Dunbar, Geoffrey, Arthur Lewbel, and Krishna Pendakur (2013), “Children’s Resources in Collective Households: Identification, Estimation, and an Application to Child Poverty in Malawi”, American Economie Review, 103(1), pp. 438–471.
Lewbel, Arthur, and Krishna Pendakur (2008), “Estimation of Collective Household Models with Engel Curves”, Journal of Econometrics, 147(2), pp. 350–358.
Lise, Jeremy, and Shannon Seitz (2011), “Consumption Inequality and Intra-household Allocations”, The Review of Economie Studies, 78(1), pp. 328–355.
Lundberg, Shelly J., Robert A. Pollak, and Terence J. Wales (1997), “Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit”, The Journal ofHuman Resources, 32(3), pp. 463–480.
Manser, Marilyn, and Murray Brown (1980), “Marriage and Household Decision-Making: A Bargaining Analysis”, International Economie Review, 21(1), pp. 31–44.
Mcelroy, Marjorie B., and Mary Jean Horney (1981), “Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand”, International Economie Review, 22(2), pp. 333–349.
Michaud, Pierre-Carl, and Frederic Vermeulen (2011), “A Collective Labor Supply Model with Complementarities in Leisure: Identification and Estimation by Means of Panel Data”, Labour Economics, 18(2), pp. 159–167.
Schultz, T. Paul (1990), “Testing the Neoclassical Model of Family Labor Supply and Fertility”, The Journal of Human Resources, 25(4), pp. 599–634.
Thomas, Duncan (1990), “Intra-Household Resource Allocation: An Inferential Approach”, The Journal of Human Resources, 25(4), pp. 635–664.
The views expressed do not necessarily reflect those of CONCORDIA Versicherungen AG.
I am grateful to two anonymous referees, Aline Bütikofer, Michael Gerfin, Boris Kaiser, Kaspar Wüthrich, and seminar participants at the University of Bern for helpful suggestions and com-ments. All errors are my own. Financial support from the Swiss National Science Foundation (Grant 100018135379) is gratefully acknowledged.
About this article
Cite this article
Burkhard, D. Allocation of Expenditures in Elderly Households and the Cost of Widowhood. Swiss J Economics Statistics 153, 371–401 (2017) doi:10.1007/BF03399512
- Collective household model
- indifference scale
- resource shares
- economies of scale in consumption
- Engel curves
- elderly households