Life Insurance and Household Consumption

Essentially, they use revealed preference to estimate equivalence scales and altruism simultaneously in the context of a fully specified model with agents facing U.S. demographic features and with access to savings markets and life insurance markets. The authors' findings indicate that individuals are very caring for their dependents, that there are large economies of scale in consumption, that children are costly but wives with children produce a lot of goods in the home, and that while females seem to have some form of habits created by marriage, men do not. These findings contrast sharply with the standard notions of equivalence scales.