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Dec
3
IRES Lunch Seminar - Khushboo Surana (KU Leuven)
By IRES Lunch Seminar

Khushboo Surana

(KU Leuven)

will give a presentation on

How different are we? Identifying the degree of revealed preference heterogeneity

Abstract:

I propose a nonparametric structural methodology to estimate the degree of heterogeneity between preferences of two individuals. Using revealed preference conditions for rational consumption behavior, the method (set) identifies interpersonal preference heterogeneity as the distance between individuals' preference rankings over a finite set of choice alternatives. The method is easy to use, robust to functional misspecification of preferences and results in informative empirical results. I apply the method to household panel data drawn from the Panel Study of Income Dynamics and find that birth year, region of residence and gender are significant factors in explaining recovered unobserved preference heterogeneity. Further, through alternate empirical applications, I demonstrate that preference heterogeneity estimates are useful information for applied demand analysis. Specifically, I take the recovered estimates to form groups of individuals with similar preferences and show that employing these groups as separate units of analysis leads to more informative demand predictions, welfare evaluations and detection of functional misspecification in case of parametric estimation.

Date
03 December
Time
12:45 - 14:00
Location
IRES, D 109
3 Place Montesquieu
Ottignies-Louvain-la-Neuve, Wallonie
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