Testing the homogeneous marginal utility of income assumption

Thomas Demuynck

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: We develop a test for the hypothesis that every agent from a population of heterogeneous consumers has the same marginal utility of income function. This homogeneous marginal utility of income (HMUI) assumption is often (implicitly) used in applied demand studies because it has nice aggregation properties and facilitates welfare analysis. If the HMUI assumption holds, we can also identify the common marginal utility of income function. We apply our results using a U.S. cross sectional dataset on food consumption.

Keywords: Aggregation; marginal utility of income; nonparametric (search for similar items in EconPapers)
Date: 2018-11-01
Note: SCOPUS: ar.j
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Published in: Econometric reviews (2018) v.37 n° 10,p.1120-1136

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Journal Article: Testing the homogeneous marginal utility of income assumption (2018)
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