Should husband and wife really pool their incomes?

Abstract

This article addresses the problem of optimal provision of household public goods in family decision-making. In particular, we attempt to answer the question of whether or not the family is better off as an entity when spouses pool their incomes. Our findings suggest that the equilibrium attained when incomes are pooled is Pareto superior to the Cournot–Nash equilibrium outcome.

Notes

¹ As Chen and Woolley (2001) indicated, household public goods share the properties of Samuelson public goods within the confines of the household; hence, they are nonrival and nonexcludable in generating utility to household members.

² The coefficient a is restricted to be strictly less than one such that one person would never consume all of the other person's private goods. In fact a is assumed to be a small fraction.