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A lattice test for additive separability

Author

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  • Matthew Polisson

    (Institute for Fiscal Studies and University of Bristol)

Abstract

We derive necessary and sufficient conditions for a finite data set of price and demand observations to be consistent with an additively separable preference. We do so without imposing concavity on any of the subutility functions or convexity of the budget set a priori, thereby generalizing earlier results. Our simple and intuitive lattice test easily accommodates departures from rationality, or errors, which subsequently facilitates a rich empirical analysis. We apply our econometric techniques to the food consumption of a panel of British households. The primary empirical finding is that additive separability has considerable success in explaining the data.

Suggested Citation

  • Matthew Polisson, 2018. "A lattice test for additive separability," IFS Working Papers W18/08, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:18/08
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    References listed on IDEAS

    as
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    2. Matthew Polisson & John K.-H. Quah & Ludovic Renou, 2020. "Revealed Preferences over Risk and Uncertainty," American Economic Review, American Economic Association, vol. 110(6), pages 1782-1820, June.
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    Cited by:

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    3. Mikhail Freer & Marco Castillo, 2021. "A General Revealed Preference Test for Quasilinear Preferences: Theory and Experiments," Papers 2111.01248, arXiv.org, revised Dec 2022.
    4. Yu Wang & Saleem Ahmad & Liaqat Ali Waseem & Sonia Akhter & Mokhchy Jihane, 2023. "Corporate social responsibility stimulus on environmental problems: Spatial threshold model analysis," PLOS ONE, Public Library of Science, vol. 18(6), pages 1-17, June.
    5. Wei-zhi Qin & Hendrik Rommeswinkel, 2024. "Quasi-separable preferences," Theory and Decision, Springer, vol. 96(4), pages 555-595, June.

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    More about this item

    Keywords

    additive separability; consumer demand; lattice test; revealed preference;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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