IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v261y2026ics0165176526000340.html

Heterogeneity in MPCs and unexplained variation in consumption expenditures

Author

Listed:
  • Rozsypal, Filip
  • Schlafmann, Kathrin

Abstract

Quantile regression is a popular method to estimate the dispersion in MPCs in the population. We discuss the challenges that this method faces given the large unexplained variation in consumption expenditures in survey data. We highlight that quantile regression estimates do not recover the distribution of MPCs if either unexplained variation is due to measurement error or if differences in MPCs are partly driven by ex ante heterogeneity across households. To quantify the likely extent of the bias, we propose a simulation-based approach where we back out the underlying distribution of MPCs for a range of calibrations that attribute the unexplained variation to a split between unobserved factors and measurement noise. All results point in the same direction: the true distribution of MPCs is significantly more dispersed than what is estimated by quantile regression.

Suggested Citation

  • Rozsypal, Filip & Schlafmann, Kathrin, 2026. "Heterogeneity in MPCs and unexplained variation in consumption expenditures," Economics Letters, Elsevier, vol. 261(C).
    • Handle: RePEc:eee:ecolet:v:261:y:2026:i:c:s0165176526000340
    DOI: 10.1016/j.econlet.2026.112840
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176526000340
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2026.112840?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:261:y:2026:i:c:s0165176526000340. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.