Intertemporal Behavior and Household Structure

In this paper, the traditional household Euler equations are estimated for singles and separately for couples. Using the CEX and the PSID, I reject the Euler equations of couples, but I cannot reject the Euler equations of singles. To rationalize this result, I develop an intertemporal model with two features. First, household members are represented using individual preferences. Second, household members cannot commit to future allocations of resources. It is shown that an excess sensitivity test should generally reject the household Euler equations of couples, but not of singles. A test is then derived to evaluate the explanation given in this paper against alternative hypotheses using a proportionality condition which is specific to the intertemporal model introduced here. I cannot reject the rationalization provided in this paper