Preference heterogeneity and the rank of demand systems
Date
1999Source
Journal of Business and Economic StatisticsVolume
17Pages
248-252Google Scholar check
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This article examines the effect of preference heterogeneity on nonparametric and parametric tests of the rank of demand systems. Using samples of households drawn from the U.K. Family Expenditure Survey, we find that preference heterogeneity increases the rank of demand systems. When the effects of household characteristics on demand are removed by semiparametric techniques, a rank-3 demand system appears to be an adequate empirical specification for all samples. © 1999 Taylor & Francis Group, LLC.