Arbeitspapier

Homothetic Efficiency. A Non-Parametric Approach

This article provides a robust non-parametric approach to demand analysis based on a concept called homothetic efficiency. Homotheticity is a useful restriction or assumption but data rarely satisfy testable conditions. To overcome this problem, this article provides a way to estimate homothetic efficiency of consumption choices by consumers. The basic efficiency index suggested is similar to Afriat's (1972) efficiency index and Varian's (1993) violation index. It generalises Heufer's (2013b) two-dimensional concept to arbitrary dimensions and is motivated by a form of rationalisation similar to the one proposed by Halevy et al. (2012). The method allows to construct scalar factors which can be used to construct revealed preferred and worse sets. The approach also provides considerably more discriminatory power against irrational behaviour than standard utility maximisation. An application to experimental and household expenditure data illustrates how the method allows to recover preferences and increase test power.

ISBN
978-3-86788-569-0
Sprache
Englisch

Erschienen in
Series: Ruhr Economic Papers ; No. 496

Klassifikation
Wirtschaft
Semiparametric and Nonparametric Methods: General
Consumer Economics: Theory
Consumer Economics: Empirical Analysis
Thema
demand theory
efficiency
experimental economics
homotheticity
non-parametric analysis
revealed preference
utility maximisation

Ereignis
Geistige Schöpfung
(wer)
Heufer, Jan
Hjertstrand, Per
Ereignis
Veröffentlichung
(wer)
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
(wo)
Essen
(wann)
2014

DOI
doi:10.4419/86788569
Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Heufer, Jan
  • Hjertstrand, Per
  • Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Entstanden

  • 2014

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