Bram de Rock: Stable Marriage, Household Consumption and Unobserved Match Quality

We present a methodology for the structural empirical analysis of household consumption and time use behaviour under marital stability. Without making use of the transferable utility assumption, but still allowing for consumption transfers between spouses, our method can identify individuals’ unobserved match qualities and quantify them in money metric terms. Our approach is of the revealed preference type and non-parametric, meaning that it does not require a prior functional specification of individual utilities. We can include 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. Our results reveal intuitive patterns of unobserved match quality that allow us to rationalise both the observed matches and the within-household allocations of time and money.