A Practical Revealed Preference Model for Separating Preferences and Availability Effects in Marriage Formation
Many problems in demography require models for partnership formation that separate latent preferences for partners from the availability of partners. We consider a model for matchings within a bipartite population where individuals have utility for people based on known and unknown characteristics. People can form a partnership or remain unpartnered. The model represents both the availability of potential partners of different types and preferences of individuals for such people. We develop Menzel’s (2015) framework to estimate preference parameters based on sample survey data on partnerships and population composition. We conduct simulation studies based on new marriages observed in the Survey for Income and Program Participation (SIPP) to show that, for realistic population sizes, the model recovers preference parameters that are invariant under different population availabilities. We also develop confidence intervals that have correct coverage. This model can be applied in family demography to understand individual preferences given different availabilities.