Title: Nonparametric tests of collectively rational consumption behavior: an integer programming procedure
Authors: Cherchye, Laurens
De Rock, Bram
Sabbe, Jeroen
Vermeulen, Frederic
Issue Date: Jan-2008
Publisher: K.U.Leuven, Faculty of Economics and Applied Economics : Department of Economics
Series Title: CES - Discussion paper series (DPS) 08.01 pages:1-31
Abstract: We present an IP-based nonparametric (revealed preference) testing procedure for rational consumption behavior in terms of general collective models, which include consumption externalities and public consumption. An empirical application to data drawn from the Russia Longitudinal Monitoring Survey (RLMS) demonstrates the practical usefulness of the procedure. Finally, we present extensions of the testing procedure to evaluate the goodness-of-fit of the collective model subject to testing, and to quantify and improve the power of the corresponding collective rationality tests.

Key words: collective consumption model, revealed preferences, nonparametric rationality tests, integer programming (IP).

JEL-classification: D11, D12, C14.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Research Center of Public Economics, Leuven
Department of Economics, Leuven - miscellaneous
Faculty of Business and Economics, Campus Kulak Kortrijk – miscellaneous

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