Weeks 6 and 7
Non-Unitary models
Gains from marriage
• From an economic standpoint marriage is a partnership for the purpose of joint production and
consumption
• This partnership yields gains of a twofold nature: economic gains and emotional gains
• Economic gains arise from
◦ Sharing of public goods
◦ Specialisation within the household
◦ Within household credit
‣ Under imperfect credit markers, households can undertake some e cient investment
that singles can’t
◦ Risk sharing
◦ Children
Public goods
Assumptions:
• Price of both goods normalised to 1
• Each partner only cares about their own utility
• Utility is increasing in both private and public goods for both agents
• Preferences are monotonic
It agents
sela.b Wh
matusQ.gs s.t.Qtqseys Qatqa7,1Qbqbty
Public
good Q
Married
Private
good asgaqb
mm New
b udgetconstraint Qqatqbeya
selab y usCQ.gs aiai
Newpossibleb undle Cam
IS
MARRIED INDIVIDUAL
Assume
Q Qb
NBQ goteyeQ geyb
QÉ
j Q Q gate'sgag's
11 ya y imoneyleftover
Qmegmatamb
2 valamama va
Q 99
U amam uhCaaqbHsub cab bigas at abt ofutility
paretoimprovement
, EXAMPLE
usQas
Individual 07 1
thesum their
utilities
Iftheyagreeto
Married maximise
Qs.t.Qqaqb
yaey at
mailgaeqb
e qbt gaeyb
yatyb.ca
2 2
t Frontier UPF
utility
possibility
um
a gents
pairs both
set
The attainableutility
for
that
ofCramumbsuch
set y yby
umatumb atlqat.iq
occurs
it
11 11
users's
umatumb
I
y
Specialisation
MODEL
Production home
g ood z requirestimetandmarketgoodx
of
function
Production z xt
Income well t
us zs
INDIVIDUAL
tssts.wherewslitssts
mqwsel zs.es zstE
MARRIED
theycanactordacewalltalewble tb
2m walltaltwbll.tn tatty
NBIftheymaintainsamet 12 zm s zatzbt wa.tw
duetoinereturns
BUT optimalallocationisfullspecialisation zmt
malwa.ws
Imperfect credit markets
SETUP INDIVIDUAL
s ab t 1.2 usw intentO
uscas.cilenas
As Gotoschoolatttw ork S.W uses U W whenw 2
lne. nI
wits ow s
Non-Unitary models
Gains from marriage
• From an economic standpoint marriage is a partnership for the purpose of joint production and
consumption
• This partnership yields gains of a twofold nature: economic gains and emotional gains
• Economic gains arise from
◦ Sharing of public goods
◦ Specialisation within the household
◦ Within household credit
‣ Under imperfect credit markers, households can undertake some e cient investment
that singles can’t
◦ Risk sharing
◦ Children
Public goods
Assumptions:
• Price of both goods normalised to 1
• Each partner only cares about their own utility
• Utility is increasing in both private and public goods for both agents
• Preferences are monotonic
It agents
sela.b Wh
matusQ.gs s.t.Qtqseys Qatqa7,1Qbqbty
Public
good Q
Married
Private
good asgaqb
mm New
b udgetconstraint Qqatqbeya
selab y usCQ.gs aiai
Newpossibleb undle Cam
IS
MARRIED INDIVIDUAL
Assume
Q Qb
NBQ goteyeQ geyb
QÉ
j Q Q gate'sgag's
11 ya y imoneyleftover
Qmegmatamb
2 valamama va
Q 99
U amam uhCaaqbHsub cab bigas at abt ofutility
paretoimprovement
, EXAMPLE
usQas
Individual 07 1
thesum their
utilities
Iftheyagreeto
Married maximise
Qs.t.Qqaqb
yaey at
mailgaeqb
e qbt gaeyb
yatyb.ca
2 2
t Frontier UPF
utility
possibility
um
a gents
pairs both
set
The attainableutility
for
that
ofCramumbsuch
set y yby
umatumb atlqat.iq
occurs
it
11 11
users's
umatumb
I
y
Specialisation
MODEL
Production home
g ood z requirestimetandmarketgoodx
of
function
Production z xt
Income well t
us zs
INDIVIDUAL
tssts.wherewslitssts
mqwsel zs.es zstE
MARRIED
theycanactordacewalltalewble tb
2m walltaltwbll.tn tatty
NBIftheymaintainsamet 12 zm s zatzbt wa.tw
duetoinereturns
BUT optimalallocationisfullspecialisation zmt
malwa.ws
Imperfect credit markets
SETUP INDIVIDUAL
s ab t 1.2 usw intentO
uscas.cilenas
As Gotoschoolatttw ork S.W uses U W whenw 2
lne. nI
wits ow s
