How different are we? Identifying the degree of revealed preference heterogeneity
Khushboo Surana
Discussion Papers from Department of Economics, University of York
Abstract:
I present a nonparametric method to empirically identify the degree of heterogeneity in individual preferences. Using revealed preference conditions for rational consumption behaviour, the method estimates interpersonal preference heterogeneity as the distance between individual preference rankings over a finite set of choice alternatives. An application to US consumption data drawn from the Panel Study of Income Dynamics shows that the method yields informative empirical results on the distance-based heterogeneity measure. I further show the usefulness of the method for applied demand analysis through three empirical applications. Specifically, I take the recovered estimates to form groups of individuals with similar preferences. I demonstrate that employing these preference types as separate units of analysis obtains more informative demand predictions, welfare evaluations and detection of functional misspecification in the case of parametric estimation.
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: 2022-11
New Economics Papers: this item is included in nep-dcm and nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://www.york.ac.uk/media/economics/documents/discussionpapers/2022/2209.pdf Main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
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:yor:yorken:22/09
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 ().