A Simple Method to Account for Measurement Errors in Revealed Preference Tests

Hjertstrand, Per

doi:10.2139/ssrn.2466339

Cited by 5 publications

(2 citation statements)

References 31 publications

(54 reference statements)

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“…However, the test is more conservative than Varian's. Hjertstrand (2013) pointed out that the test statistic F can be calculated by solving a sequence of linear programming problems in the form of a binary search. He also noted that this is the most computationally expensive part of the implementation.…”

Section: Measurement Errorsmentioning

confidence: 99%

Samuelson's Approach to Revealed Preference Theory: Some Recent Advances

Demuynck

Hjertstrand

2019

SSRN Journal

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Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use:Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

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Section: Measurement Errorsmentioning

confidence: 99%

Samuelson's Approach to Revealed Preference Theory: Some Recent Advances

Demuynck

Hjertstrand

2019

SSRN Journal

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“…Tsur (1989) imposes a log-normal multiplicative measurement-error structure in expenditures. Hjertstrand (2013) proposes a generalization of Tsur (1989) and of Varian (1985), one which provides a statistical framework for testing RP consistency but requires knowing the distribution of measurement error. Our approach only requires a centering condition on the measurement error distribution.…”

Section: Literature Reviewmentioning

confidence: 99%

Stochastic Revealed Preferences with Measurement Error

Aguiar¹,

Kashaev²

2018

Preprint

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A long-standing question about consumer behavior is whether individuals' observed purchase decisions satisfy the revealed preference (RP) axioms of the utility maximization theory (UMT). Researchers using survey or experimental panel data sets on prices and consumption to answer this question face the well-known problem of measurement error. We show that ignoring measurement error in the RP approach may lead to overrejection of the UMT. To solve this problem, this paper proposes a new statistical RP framework for consumption panel data sets that allows for testing the UMT in the presence of measurement error. Our test is applicable to all consumer models that can be characterized by their first-order conditions. Our approach is nonparametric, allows for unrestricted heterogeneity in preferences, and requires only a centering condition on measurement error. We develop two applications that provide new evidence about the UMT. First, we find support in a survey dataset for the dynamic and time-consistent UMT in single-individual households, in the presence of nonclassical measurement error in consumption. In the second application, we cannot reject the static UMT in a widely used experimental dataset where measurement error in prices is assumed to be the result of price misperception due to the experimental design. The first finding stands in contrast to the conclusions drawn from the deterministic RP test of Browning (1989). The second finding reverses the conclusions drawn from the deterministic RP test of Afriat (1967) andVarian (1982). JEL classification numbers: C60, D10.

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Samuelson’s Approach to Revealed Preference Theory: Some Recent Advances

Demuynck

Hjertstrand

2019

Remaking Economics: Eminent Post-War Economists

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Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

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A Simple Method to Account for Measurement Errors in Revealed Preference Tests

Cited by 5 publications

References 31 publications

Samuelson's Approach to Revealed Preference Theory: Some Recent Advances

Samuelson's Approach to Revealed Preference Theory: Some Recent Advances

Stochastic Revealed Preferences with Measurement Error

Samuelson’s Approach to Revealed Preference Theory: Some Recent Advances

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