Revealed Preference Analysis with Normal Goods: Application to Cost of Living Indices

Laurens Cherchye, Thomas Demuynck, Bram De Rock and Khushboo Surana

No 2018-08, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: We present a revealed preference methodology for nonparametric demand analysis under the assumption of normal goods. Our methodology is exible in that it allows for imposing normality on any subset of goods. We show the usefulness of our methodology for empirical welfare analysis through cost of living indices. An illustration to US consumption data drawn from the Panel Study of Income Dynamics (PSID) demonstrates that mild normality assumptions can substantially strengthen the empirical analysis. In particular, it obtains considerably tighter bounds on cost of living indices, and a significantly more informative classification of better-off and worse-off individuals after the 2008 financial crisis.

Keywords: nonparametric demand analysis; revealed preferences; normal goods; individual welfare analysis; cost of living indices (search for similar items in EconPapers)
Pages: 29 p.
Date: 2018-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/2694 ... _SURANA-revealed.pdf Œuvre complète ou partie de l'œuvre (application/pdf)

Related works:
Journal Article: Revealed Preference Analysis with Normal Goods: Application to Cost-of-Living Indices (2020)
Working Paper: Revealed Preference Analysis with Normal Goods: Application to Cost of Living Indices (2020)
Working Paper: Revealed preference analysis with normal goods: application to cost of living indices (2018)
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:eca:wpaper:2013/269402

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/269402

Access Statistics for this paper

More papers in Working Papers ECARES from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().