Revealed price preference: Theory and empirical analysis

Arbeitspapier

To determine the welfare implications of price changes in demand data, we introduce a revealed preference relation over prices. We show that the absence of cycles in this relation characterizes a consumer who trades off the utility of consumption against the disutility of expenditure. Our model can be applied whenever a consumer's demand over a strict subset of all available goods is being analyzed; it can also be extended to settings with discrete goods and nonlinear prices. To illustrate its use, we apply our model to a single-agent data set and to a data set with repeated cross-sections. We develop a novel test of linear hypotheses on partially identified parameters to estimate the proportion of the population who are revealed better off due to a price change in the latter application. This new technique can be used for nonparametric counterfactual analysis more broadly

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cemmap working paper ; No. CWP22/21

Classification and Topics

• Classification: Wirtschaft
• Subject: Konsumentenverhalten ; Offenbarte Präferenzen ; Preisniveau ; Statistischer Test ; Nichtparametrisches Verfahren ; Großbritannien ; Kanada

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Deb, Rahul ; Kitamura, Yuichi ; Quah, John K.-H. ; Stoye, Jörg
• Event: Veröffentlichung
• (who): Centre for Microdata Methods and Practice (cemmap)
• (where): London
• (when): 2021

Further information

• DOI: doi:10.47004/wp.cem.2021.2221
• Handle: http://hdl.handle.net/10419/241958
• Last update: 10.03.2025, 11:43 AM CET