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Titel
Homothetic Efficiency : a non-parametric approach / Jan Heufer and Per Hjertstrand
VerfasserHeufer, Jan ; Hjertstrand, Per
ErschienenBochum : RWI, 2014
Umfang30 S. : graph. Darst.
SerieRuhr economic papers ; 496
SchlagwörterOnline-Ressource
URNurn:nbn:de:hbz:6:2-41577 
DOI10.4419/86788569 
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Homothetic Efficiency [0.55 mb]
Zusammenfassung

This article provides a robust non-parametric approach to demand analysis based on a concept called homothetic efficiency. Homotheticity is a useful restriction or assumption but data rarely satisfy testable conditions. To overcome this problem, this article provides a way to estimate homothetic efficiency of consumption choices by consumers. The basic efficiency index suggested is similar to Afriats (1972) efficiency index and Varians (1993) violation index. It generalises Heufers (2013b) two-dimensional concept to arbitrary dimensions and is motivated by a form of rationalisation similar to the one proposed by Halevy et al. (2012). The method allows to construct scalar factors which can be used to construct revealed preferred and worse sets. The approach also provides considerably more discriminatory power against irrational behaviour than standard utility maximisation. An application to experimental and household expenditure data illustrates how the method allows to recover preferences and increase test power.

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