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How Large is Your Reference Group

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  • Claude Montmarquette
  • François Gardes

Abstract

We discuss how specifications of interdependent preferences found in the literature yield biased estimates of parameters of the underlying consumption or choice models. We present new specifications which alleviate this problem and permit an estimation of the size of the reference group. This last point, a key element affecting the estimation biases, has been overlooked in most studies. Using French individual data on the reported subjective poverty level, we show that the reference group is likely to be very small. L'interdépendance des préférences telle que spécifiée dans les études économétriques de consommation ou de choix individuel conduit à des estimateurs biaisés. Dans cette étude, nous présentons de nouvelles spécifications économétriques qui prennent en contre ce problème et qui permettent un estimé de la taille du groupe de référence. Ce dernier élément est ignoré dans les écrits actuels et s'avère très important pour juger des biais d'estimation. Nous montrons à l'aide de données françaises sur le niveau relatif et subjectif de pauvreté que ce groupe de référence est vraisemblablement de très petite taille.

Suggested Citation

  • Claude Montmarquette & François Gardes, 2002. "How Large is Your Reference Group," CIRANO Working Papers 2002s-87, CIRANO.
  • Handle: RePEc:cir:cirwor:2002s-87
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    File URL: http://www.cirano.qc.ca/files/publications/2002s-87.pdf
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    References listed on IDEAS

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    1. Aronsson, Thomas & Blomquist, Soren & Sacklen, Hans, 1999. "Identifying Interdependent Behaviour in an Empirical Model of Labour Supply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(6), pages 607-626, Nov.-Dec..
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    Cited by:

    1. Claude Montmarquette, 2008. "L'économétrie des données expérimentales : défis et opportunités," Économie et Prévision, Programme National Persée, vol. 182(1), pages 7-17.
    2. repec:eee:rujoec:v:2:y:2016:i:1:p:56-85 is not listed on IDEAS

    More about this item

    Keywords

    Interdependent preference; biased estimates; size of the reference group; Interdépendance des préférences; estimateurs biaisés; taille du groupe de référence;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D0 - Microeconomics - - General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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