Homothetic Efficiency: Theory and Applications

A-Tier
Journal: Journal of Business & Economic Statistics
Year: 2019
Volume: 37
Issue: 2
Pages: 235-247

Authors (2)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We provide a nonparametric revealed preference approach to demand analysis based on homothetic efficiency. Homotheticity is widely assumed (often implicitly) because it is a convenient and often useful restriction. However, this assumption is rarely tested, and data rarely satisfy testable conditions. To overcome this, we provide a way to estimate homothetic efficiency of consumption choices. The method provides considerably higher discriminatory power against random behavior than the commonly used Afriat efficiency. We use experimental and household survey data to illustrate how our approach is useful for different empirical applications and can provide greater predictive success.

Technical Details

RePEc Handle
repec:taf:jnlbes:v:37:y:2019:i:2:p:235-247
Journal Field
Econometrics
Author Count
2
Added to Database
2026-02-02