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Nonparametric tests of collectively rational consumption behavior: An integer programming procedure

Listed author(s):
  • Cherchye, Laurens
  • De Rock, Bram
  • Sabbe, Jeroen
  • Vermeulen, Frederic

We present an IP-based nonparametric (revealed preference) testing procedure for rational consumption behavior in terms of a general collective model, which includes consumption externalities and public consumption. An empirical application to data drawn from the Russia Longitudinal Monitoring Survey (RLMS) demonstrates the practical usefulness of the procedure. Finally, we present extensions of the testing procedure to evaluate the goodness-of-fit (accounting for optimization error as well as measurement error) of the collective model subject to testing.

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Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 147 (2008)
Issue (Month): 2 (December)
Pages: 258-265

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Handle: RePEc:eee:econom:v:147:y:2008:i:2:p:258-265
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

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  6. Cherchye, L.J.H. & de Rock, B. & Vermeulen, F.M.P., 2009. "Opening the black box of intra-household decision-making : Theory and non-parametric empirical tests of general collective consumption models," Other publications TiSEM bc6d0cf7-c686-40a4-84f4-9, Tilburg University, School of Economics and Management.
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  15. Laurens Cherchye & Bram De Rock & Jeroen Sabbe & Frederic Vermeulen, 2008. "Nonparametric tests of collectively rational consumption behavior: an integer programming procedure," Working Papers ECARES 2008-001, ULB -- Universite Libre de Bruxelles.
  16. Hal R. Varian, 1983. "Non-parametric Tests of Consumer Behaviour," Review of Economic Studies, Oxford University Press, vol. 50(1), pages 99-110.
  17. Varian, Hal R., 1985. "Non-parametric analysis of optimizing behavior with measurement error," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 445-458.
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