Interdependent preferences: an econometric analysis

✍ Scribed by Arie Kapteyn; Sara van de Geer; Huib Van de Stadt; Tom Wansbeek

• Publisher: John Wiley and Sons
• Year: 1997
• Tongue: English
• Weight: 224 KB
• Volume: 12
• Category: Article
• ISSN: 0883-7252
• DOI: 10.1002/(sici)1099-1255(199711/12)12:6<665::aid-jae437>3.0.co;2-u

✦ Synopsis

The theoretical model of Gaertner (1974) and Pollak (1976) for the interdependence of preferences in the Linear Expenditure System is estimated for a cross-section of households. The interdependence of consumption of dierent households has implications for the stochastic structure of the model and for the identi®ability of its parameters. Both aspects are dealt with. The empirical results indicate a signi®cant role played by the interdependence of preferences. One of its implications is that predictions of the eects of changes in a household's exogenous variables dier according to whether the exogenous variable only changes for this household or for all households jointly.