The homogeneous marginal utility of income assumption

T. Demuynck

Research output: Working paperProfessional

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Abstract

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.
Original languageEnglish
Place of PublicationMaastricht
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages17
DOIs
Publication statusPublished - 1 Jan 2015

Publication series

SeriesGSBE Research Memoranda
Number013

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