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Bounding quantile demand functions using revealed preference inequalities

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  • Blundell, Richard
  • Kristensen, Dennis
  • Matzkin, Rosa

Abstract

This paper develops a new approach to the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on counterfactual demand. A nonparametric estimator for these bounds is developed and asymptotic properties are derived. An empirical application using data from the UK Family Expenditure Survey illustrates the usefulness of the methods.

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  • Blundell, Richard & Kristensen, Dennis & Matzkin, Rosa, 2014. "Bounding quantile demand functions using revealed preference inequalities," Journal of Econometrics, Elsevier, vol. 179(2), pages 112-127.
  • Handle: RePEc:eee:econom:v:179:y:2014:i:2:p:112-127
    DOI: 10.1016/j.jeconom.2014.01.005
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    Cited by:

    1. Laurens Cherchye & Bram De Rock & Arthur Lewbel & Frederic Vermeulen, 2015. "Sharing Rule Identification for General Collective Consumption Models," Econometrica, Econometric Society, vol. 83(5), pages 2001-2041, September.
    2. Sam Cosaert & Thomas Demuynck, "undated". "Nonparametric welfare and demand analysis with unobserved individual heterogeneity," ULB Institutional Repository 2013/251988, ULB -- Universite Libre de Bruxelles.
    3. Sokbae Lee & Kyungchul Song & Yoon-Jae Whang, 2014. "Testing For A General Class Of Functional Inequalities," KIER Working Papers 889, Kyoto University, Institute of Economic Research.
    4. Hoderlein, Stefan & Holzmann, Hajo & Meister, Alexander, 2017. "The triangular model with random coefficients," Journal of Econometrics, Elsevier, vol. 201(1), pages 144-169.
    5. repec:eee:jetheo:v:172:y:2017:i:c:p:163-201 is not listed on IDEAS
    6. Hoderlein, Stefan & Su, Liangjun & White, Halbert & Yang, Thomas Tao, 2016. "Testing for monotonicity in unobservables under unconfoundedness," Journal of Econometrics, Elsevier, vol. 193(1), pages 183-202.
    7. repec:spr:etbull:v:3:y:2015:i:2:d:10.1007_s40505-014-0061-5 is not listed on IDEAS
    8. Yuichi Kitamura & Jorg Stoye, 2016. "Nonparametric Analysis of Random Utility Models," Papers 1606.04819, arXiv.org, revised Dec 2017.
    9. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2017. "Household Consumption When the Marriage Is Stable," American Economic Review, American Economic Association, vol. 107(6), pages 1507-1534, June.
    10. Arman Bidarbakht Nia, 2017. "A generalization to QUAIDS," Empirical Economics, Springer, vol. 52(1), pages 393-410, February.
    11. Hache, Emmanuel & Leboullenger, Déborah & Mignon, Valérie, 2017. "Beyond average energy consumption in the French residential housing market: A household classification approach," Energy Policy, Elsevier, vol. 107(C), pages 82-95.
    12. Richard Blundell & Martin Browning & Laurens Cherchye & Ian Crawford & Bram De Rock & Frederic Vermeulen, 2015. "Sharp for SARP: Nonparametric Bounds on Counterfactual Demands," American Economic Journal: Microeconomics, American Economic Association, vol. 7(1), pages 43-60, February.
    13. Blundell, Richard & Kristensen, Dennis & Matzkin, Rosa, 2014. "Bounding quantile demand functions using revealed preference inequalities," Journal of Econometrics, Elsevier, vol. 179(2), pages 112-127.
    14. Ian Crawford & Matthew Polisson, 2015. "Demand Analysis with Partially Observed Prices," Discussion Papers in Economics 15/12, Department of Economics, University of Leicester, revised Dec 2016.
    15. Kaido, Hiroaki, 2016. "A dual approach to inference for partially identified econometric models," Journal of Econometrics, Elsevier, vol. 192(1), pages 269-290.
    16. Sam Cosaert & Thomas Demuynck, 2015. "Revealed preference theory for finite choice sets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 169-200, May.
    17. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram & Hjertstrand, Per, 2015. "Revealed preference tests for weak separability: An integer programming approach," Journal of Econometrics, Elsevier, vol. 186(1), pages 129-141.
    18. Nikolay Klemashev & Alexander Shananin, 2015. "Positively-homogeneous Konus-Divisia indices and their applications to demand analysis and forecasting," Papers 1501.05771, arXiv.org.
    19. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2014. "Household consumption when marriage is stable," IFS Working Papers W14/26, Institute for Fiscal Studies.
    20. Hubner, Stefan, 2016. "Topics in nonparametric identification and estimation," Other publications TiSEM 08fce56b-3193-46e0-871b-0, Tilburg University, School of Economics and Management.
    21. Laurens Cherchye & Sam Cosaert & Bram De Rock & Pieter Jan Kerstens & Frederic Vermeulen, 2017. "Individual Welfare Analysis for Collective Households," Working Papers ECARES ECARES 2017-44, ULB -- Universite Libre de Bruxelles.
    22. Abi Adams & Richard Blundell & Martin Browning & Ian Crawford, 2015. "Prices versus preferences: taste change and revealed preference," IFS Working Papers W15/11, Institute for Fiscal Studies.
    23. Laurens Cherchye & Bram De Rock & Thomas Demuynck, 2017. "Bounding Counterfactual Demand with Unobserved Heterogeneity and Endogenous Expenditures," Working Papers ECARES ECARES 2017-41, ULB -- Universite Libre de Bruxelles.
    24. Demuynck T., 2015. "The homogeneous marginal utility of income assumption," Research Memorandum 013, Maastricht University, Graduate School of Business and Economics (GSBE).
    25. repec:aea:aecrev:v:107:y:2017:i:5:p:287-92 is not listed on IDEAS

    More about this item

    Keywords

    Consumer behavior; Revealed preference; Bounds; Quantile regression;

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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