Revealed preference analysis with normal goods: Application to cost of living indices

Name: Revealed preference analysis with normal goods: Application to cost of living indices
Published: 2019-07-29
License: This work is licensed under an Other license created by the PSID, namely that you agree not to redistribute data or other materials without the written agreement of ICPSR, unless: 1. You serve as the OFFICIAL or DESIGNATED REPRESENTATIVE at an ICPSR MEMBER INSTITUTION and are assisting AUTHORIZED USERS with obtaining data, or 2. You are collaborating with other AUTHORIZED USERS to analyze the data for research or instructional purposes.

Principal Investigator(s): View help for Principal Investigator(s) Laurens Cherchye, KU Leuven; Thomas Demuynck, Université libre de Bruxelles; Bram De Rock, Université libre de Bruxelles; Khushboo Surana, KU Leuven

Version: View help for Version V5

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Data-and-Codes			08/03/2019 06:46:AM
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Project Citation:

Cherchye, Laurens, Demuynck, Thomas, De Rock, Bram, and Surana, Khushboo. Revealed preference analysis with normal goods: Application to cost of living indices. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-09-20. https://doi.org/10.3886/E110942V5

Project Description

Summary: We present a revealed preference methodology for nonparametric demand analysis under the assumption of normal goods. Our methodology is flexible in that it allows for imposing normality on any subset of goods. We show the usefulness of our methodology for empirical welfare analysis through cost of living indices. An illustration to US consumption data drawn from the Panel Study of Income Dynamics (PSID) demonstrates that mild normality assumptions can substantially strengthen the empirical analysis. It obtains considerably tighter bounds on cost of living indices, and a significantly more informative classification of better-off and worse-off individuals after the 2008 financial crisis.

Scope of Project

Subject Terms: [nonparametric demand analysis; , revealed preferences; , normal goods; , normal goods; , cost of living indexes; , individual welfare analysis; , individual welfare analysis; , individual welfare analysis; ]

Geographic Coverage: United States (North East, North Central, South, West)

Time Period(s): 1/1/2007 – 12/31/2013 (2007-2013 (2007, 2009, 2011, 2013))

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