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Publication Details

23 May 18

Nonparametric Welfare and Demand Analysis with Unobserved Individual Heterogeneity.

Authors: COSAERT Sam, DEMUYNCK Thomas.

Online First: 20/04/2017

DOI: http://doi.org/10.1162/REST_a_00672

Abstract:

This paper combines revealed preference and nonparametric estimation techniques to obtain nonparametric bounds on the distribution of the money metric utility and demand functions over a population of heterogeneous households. Our approach is independent of any functional specification on the household utility functions. Our method applies the Weak Axiom of Revealed Preference to a population of heterogeneous households. Although this does not produce the sharpest bounds, we show that it is computationally attractive and provides narrow bounds. We demonstrate the usefulness of our results by applying it to the Consumer Expenditure survey, a US cross?sectional consumption data set.

Reference: COSAERT Sam, DEMUYNCK Thomas. Nonparametric Welfare and Demand Analysis with Unobserved Individual Heterogeneity. Review of Economics and Statistics, 2018, vol. 100, n°2, pp. 349-361.

Keywords:
unobserved heterogeneity,
stochastic revealed preference,
household demand

Project: Nonparametric analysis of household consumption, labour supply and welfare

Linked publications
CHERCHYE Laurens, COSAERT Sam, DE ROCK Bram, KERSTENS Pieter Jan, VERMEULEN Frederic.
Journal of Public Economics, 2018, vol. 166, pp. 98-114.
COSAERT Sam.
American Economic Journal: Microeconomics, 2018, vol. 10, n°2, pp. 83-117.
BRUYNEEL Sabrina, CHERCHYE Laurens, COSAERT Sam, DE ROCK Bram, DEWITTE Siefgried.
Quantitative Economics, 2017, vol. 8, n°3, pp. 1037-1082.
COSAERT Sam.
Computational Economics, 2017.