It's complicated: A Nonparametric Test of Preference Stability between Singles and Couples

This paper develops a method to use data from singles in a non–parametric collective household setting. We use it to test the controversial assumption of preference stability between singles and couples. Our test allows for unobserved heterogeneity by defining finite-dimensional types of households according to their revealed preference relations. We show how to derive a test statistic by constructing hypothetical matches of heterogeneous individuals into different types of households using tools from stochastic choice theory. We strongly reject the preference–stability hypothesis based on consumption data from the Dutch LISS, the Russian RLMS, and the Spanish ECPF panels.