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Aggregation without the Aggravation? Nonparametric Analysis of the Representative Consumer

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Author Info

  • Cherchye, Laurens

    ()
    (K.U.Leuven)

  • Crawford, Ian

    ()
    (Institute for Fiscal Studies, London)

  • De Rock, Bram

    ()
    (ECARES, Free University of Brussels)

  • Vermeulen, Frederic

    ()
    (Tilburg University)

Abstract

In the tradition of Afriat (1967), Diewert (1973) and Varian (1982), we provide a revealed preference characterisation of the representative consumer. Our results are simple and complement those of Gorman (1953, 1961), Samuelson (1956) and others. They can also be applied to data very readily and without the need for auxilliary parametric or statistical assumptions. We investigate the application of our characterisation by means of a balanced microdata panel survey. Our findings provide robust evidence against the existence of a representative consumer for our data.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6266.

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Length: 24 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6266

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Keywords: revealed preference; aggregation; Gorman polar form; GARP;

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References

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  1. Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," CEPR Discussion Papers 2139, C.E.P.R. Discussion Papers.
  2. Blundell & Robin, 2000. "Latent separability : grouping goods without weak separability," Working Papers 156158, Institut National de la Recherche Agronomique, France.
  3. Tim Beatty & Ian Crawford, 2010. "How demanding is the revealed preference approach to demand," CeMMAP working papers CWP17/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  4. Richard Blundell & Martin Browning & Ian Crawford, 2005. "Best nonparametric bounds on demand responses," IFS Working Papers W05/20, Institute for Fiscal Studies.
  5. Dow, James & Werlang, Sérgio Ribeiro da Costa, . "The consistency of welfare judgements with a representative consumer," Economics Working Papers (Ensaios Economicos da EPGE) 87, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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  13. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-99, September.
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  17. Ian Crawford, 2006. "Necessary and Sufficient Conditions for Latent Separability," School of Economics Discussion Papers 0706, School of Economics, University of Surrey.
  18. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2007. "The Collective Model of Household Consumption: A Nonparametric Characterization," Econometrica, Econometric Society, vol. 75(2), pages 553-574, 03.
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  22. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2011. "The revealed preference approach to collective consumption behavior: nonparametric testing and sharing rule recovery," ULB Institutional Repository 2013/98560, ULB -- Universite Libre de Bruxelles.
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  29. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
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Cited by:
  1. Cherchye, L.J.H. & Demuynck, T. & Rock, B. de, 2011. "Is Utility Transferable? A Revealed Preference Analysis," Discussion Paper 2011-018, Tilburg University, Center for Economic Research.

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