Modelling Household Formation and Dissolution by Nico Keilman; Anton Kuijsten; Ad VossenReview by: Ramona Marotz-BadenPublic Choice, Vol. 68, No. 1/3 (Jan., 1991), pp. 292-293Published by: SpringerStable URL: http://www.jstor.org/stable/30025386 .

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The concluding chapters investigate large project evaluation. Limitations to first order welfare approximation of such projects are discussed and more com- plicated second order procedures are devised. These measures require "rich" information on consumer choice; consequently, theoretical approximations less demanding of data requirements are suggested. Inexact data such as upper and lower bounds are also shown useful in forming "confidence" intervals on welfare measures. Chapter 16 examines practical techniques for recovering information from more realistically observable data. Some space is devoted here to Groves-Clarke mechanisms in particular. The book concludes with a short chapter on the peak load problem.

One welcome feature of this manuscript was a notation section including a list of symbols. The author was consistent in symbol usage, greatly enhancing the readability of the text. A bonus to those interested in applications is the emphasis placed on actual implementation of results. The author goes to great lengths to formulate welfare measures based on observable data. Several chap- ters are devoted almost exclusively to recovering information from realistically available data. The book's title initially led me to expect a monograph spending more time on abstract theoretical topics; strategic manipulability, possibility theorems, demand revelation, and the like. As such topics are for the most part absent, abstract theorists may find the book somewhat lacking. Those interest- ed in foundations to applied public economics, however, will not be disap- pointed. The book is well written and carefully organized. It should serve as an excellent handbook and reference to modeling and differential analysis of decision making in the public sector.

Van Kolpin Department of Economics

University of Oregon Eugene, OR 97403

Nico Keilman, Anton Kuijsten, and Ad Vossen (Eds.), Modelling household formation and dissolution. Oxford: Clarendon Press, 1988. 320 pages. £30.00.

Modelling Household Formation and Dissolution should appeal to practi- tioners in the field of public choice and their students. It demonstrates the problems inherent to the planning required for resource coordination via po- litics.

The authors assume planners and policy makers find that "the household is usually a much more relevant unit than the individual." When the state is placed in the role of providing housing via transfers, it must define what consti- tutes the household unit. However, as other policies affect transfers which en- courage the formation of single parent households, for example, earlier models of household formation fail to be good predictors. It is this gap between expec- tations and outcomes which led to the Netherlands conference which produced this book.

Major changes in lifestyles are taking place in Western countries: longer life spans, career-oriented women delaying marriage, declining birth rates, in- creases in out of wed-lock births with mothers keeping their babies, increases in divorce rates, increases in cohabitation, more single person households and

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more households without children. Current demographic methodologies have difficulty taking these changes into account. Keilman, Kuijsten, and Vossen's edited volume is based on the assumption that the concept of household should incorporate additional lifestyle variables in order to reflect lifestyle changes leading to differing forms of households.

The editors classify household models on two dimensions: a static/dynamic dichotomy, and an explanatory dimension consisting of econometric, micro- demographic, and macrodemographic models. The bulk of the book is devoted to dynamic macrodemographic models which the editors and a number of the authors believe produce better predictions than static models. In Chapter 16, Bartlema and Vossen cite research indicating a 10% or more discrepancy be- tween forecasts and reality within a five year period. They point out that "discrepancies between observed and predicted values are largest for varia- bles in which the component of personal decision-making intervenes most strongly: migration, marriage, divorce, and fertility." It is difficult to see how even very large dynamic models could take into account governmental policy and the myriad other forces which interact to influence such individual decisions.

The book is divided into 5 sections. The first briefly introduces the relevance of househould modelling for social planning, and discusses sociological and economic perspectives on household formation and dissolution as well as their respective definitions of household. Section Two focuses on European house- hold trends and sources of household data. The third section presents various types of household modelling. Articles in Section Four examine practical appli- cations of these models. The concluding section contains a critical analysis of household modelling and discusses methodological problems of current dy- namic household models. There is also a synthesis of what the editors consider as the most important issues in the book: defining the concept of household, current trends in household formation and dissolution; linkages between household theory, household modelling, and household forecasting; macro- versus micromodels; the modelling of household dynamics; the household ver- sus the individual as a unit of analysis and modelling; and prospects for data collection and techniques for parameter estimation.

Modelling Household Formation and Dissolution by Keilman, Kuij sten, and Vossen is an interesting and useful book in that it exemplifies the second order consequences of governmental planning. As governments attempt to redistrib- ute populations with the purported aim of improving the balance between population, amenities, and resources, this type of research will become increasingly common. Such exercises are by-products inherent to failures to understand the implications of the rationale calculations debate of the 1930s.

Ramona Marotz-Baden Department of Health & Human Development

Montana State University Bozeman, MT 69717

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