We develop a test to verify if every agent from a population of heterogeneous consumers has the same marginal utility of income function. This homogeneous marginal utility of income assumption is often (implicitly) used in applied demand studies because it has nice aggregation properties and facilitates welfare analysis. If a dataset satisfies our test, we can further identify the common marginal utility of income function. We apply our results using a US cross sectional dataset on food consumption.
|Series||GSBE Research Memoranda|