Monday Afternoon Seminar: Individual Consumption in Collective Households: Identification Using Panel Data with an Application to PROGRESA

Individual consumption, a fundamental wellbeing metric, is not normally observed for individuals living with others. For these individuals, individual consumption is equal to the share of household expenditure that each individual consumes – their “budget share” – times household expenditure. Previous literature has achieved point identification of individual budget shares within a collective household framework by assuming that preferences are similar across different individuals. Here we show that individual budget shares can instead be identified using panel data under the intuitive assumption that individual preferences are stable between panel waves. We use this method to estimate the effect of PROGRESA on the intrahousehold distribution of resources, and find that the conditional cash transfer program did not decrease adult men’s shares, and only increased children’s shares to the detriment of women’s shares.