How different are we? Identifying the degree of revealed preference heterogeneity

Khushboo Surana

Discussion Papers from Department of Economics, University of York

Abstract: We propose a nonparametric method to identify the degree of heterogeneity in individual preferences. Using preference information revealed by observed behavior, the method estimates interpersonal preference heterogeneity as the Kemeny distance between individual preference rankings. Using data from the U.S. Panel Study of Income Dynamics (PSID), we derive bounds on the distance-based heterogeneity measure, which we then use to group individuals with similar preferences. We demonstrate that constructing such preference types can substantially strengthen empirical analysis by (i) producing more accurate demand predictions, (ii) improving welfare analysis, and (iii) detecting functional misspecifications in parametric methodologies.

Keywords: Preference heterogeneity; Revealed preference analysis; Kemeny distance (search for similar items in EconPapers)
JEL-codes: C14 C60 D11 D12 (search for similar items in EconPapers)
Date: 2025-09
New Economics Papers: this item is included in nep-dcm
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.york.ac.uk/media/economics/documents/discussionpapers/2025/2503.pdf Main text (application/pdf)

Related works:
Working Paper: How different are we? Identifying the degree of revealed preference heterogeneity (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:25/03

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of York Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Paul Hodgson ().