Bruce Bartlett sends me a link to this interesting paper:
How large are the economies of scale of living together? And how do partners share their resources? The first question is usually answered by equivalence scales. Traditional estimation and application of equivalence scales assumes equal sharing of income within the household. This paper uses data on financial satisfaction to simultaneously estimate the sharing rule and the economy of scale parameter in a collective household model. The estimates indicate substantial scale economies of living together, especially for couples who have lived together for some time. On average, wives receive almost 50% of household resources, but there is heterogeneity with respect to the wives’ contribution to household income and the duration of the relationship.
The data are from Switzerland, in case you are wondering, not the United States.
Are there any comparable data on larger households? If, as the paper shows, household efficiency increases with size at low household size, and supposing that efficiency does not grow without limit, there must be a maximum efficiency at some size (Basque pair farms? extended family under one roof? kibbutz?)
I thought this might be an interesting article, but it’s jam packed with a bunch of equations that do not seem to be connected to anything tangible.
Unfortunately, they’ve been scooped.
http://www.theonion.com/content/video/nations_girlfriends_unveil_new
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