Habits Revealed

Ian Crawford

Review of Economic Studies, 2010, vol. 77, issue 4, 1382-1402

Abstract: This paper sets out necessary and sufficient empirical conditions for rational intrinsic habits models in the revealed preference tradition of Samuelson (1948) , Houthakker (1950) , Afriat (1967) , and Browning (1989) . The conditions in the paper are shown to be computationally straightforward and to yield set identification for certain features of the model. The ideas outlined are applied to a microeconomic panel dataset. The addition of habit formation to the discounted utility model is shown to improve the rationalizability of the microdata considerably. Even if habit formation is rejected, it is shown that modest and plausible allowance for heterogeneity in prices and interest rates is sufficient to bring consumption behaviour into line with the theory. Copyright , Wiley-Blackwell.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (26) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1467-937X.2010.00604.x (application/pdf)
Access to full text is restricted to subscribers.

Related works:
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:oup:restud:v:77:y:2010:i:4:p:1382-1402

Access Statistics for this article

Review of Economic Studies is currently edited by Thomas Chaney, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Kurt Mitman, Francesca Molinari, Katrine Loken and Elias Papaioannou

More articles in Review of Economic Studies from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().