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A nonparametric test of weak separability and consumer preferences

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  • Fleissig, Adrian R.
  • Whitney, Gerald A.
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    Abstract

    Two stochastic nonparametric procedures are developed to evaluate the significance of violations of weak separability. When the data have measurement error, we show that the necessary and sufficient weak separability conditions of Varian [Varian, H., 1983. Nonparametric tests of consumer behavior. Review of Economic Studies 50, 99-110] must also satisfy the Afriat inequalities. The tests detect weak separability with high probability for weakly separable data. In addition, the procedures correctly reject weak separability for both nonseparable and random utility simulated data sets. The tests also fail to reject weak separability for a monetary and consumption data set which suggests that measurement error may be the source of the observed violations.

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    Article provided by Elsevier in its journal Journal of Econometrics.

    Volume (Year): 147 (2008)
    Issue (Month): 2 (December)
    Pages: 275-281

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    Handle: RePEc:eee:econom:v:147:y:2008:i:2:p:275-281
    Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

    Keywords: Weak separability procedure Revealed preference;

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    Cited by:

    1. John Quah, 2014. "A test for weakly separable preferences," Economics Series Working Papers 708, University of Oxford, Department of Economics.
    2. Laurens Cherchye & Ian Crawford & Bram De Rock & Frederic Vermeulen, 2012. "Aggregation without the aggravation? Nonparametric analysis of the representative consumer," CeMMAP working papers CWP03/12, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    3. Cherchye, L.J.H. & Crawford, I. & Rock, B. de & Vermeulen, F.M.P., 2011. "Aggregation without the Aggravation? Nonparametric Analysis of the Representative Consumer," Discussion Paper 2011-143, .
    4. Hjertstrand, Per & Jones, Barry E., 2013. "What Do Revealed Preference Axioms Reveal about Elasticities of Demand?," Working Paper Series 972, Research Institute of Industrial Economics.

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