Spouses with benefits: on match quality and consumption inside households

Abstract

We model the interaction between the marriage market and the intra-household allocation of resources in a setting that accounts for both economic gains to marriage (through public consumption) and unobserved non-material match quality, without imposing transferable utility. We follow an axiomatic approach that leads to the empirically tractable “Additive Quantity Shifting” (AQS) model. Using a revealed preference methodology, we are able to identify individuals’ match qualities and to quantify these in money metric terms. The methodology includes both preference factors, affecting individuals’ preferences over private and public goods, and match quality factors, driving differences in unobserved match quality. We demonstrate the practical usefulness of our methodology through an application to the Belgian MEqIn data. We find intuitive patterns of match quality that allow us to rationalise both the observed matches and the within-household allocations of time and money.