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Stata Journal

Consistent Subsets: Computing the Houtman-Maks Index in Stata

Journal Article
Hjertstrand, Per and Marcos Demetry (2023). “Consistent Subsets: Computing the Houtman-Maks Index in Stata”. Stata Journal 23(2), 578–588.

Per Hjertstrand, Marcos Demetry

The Houtman-Maks index is a measure of the size of a violation of utility maximizing (i.e., rational) behavior. This note introduces the Stata command hmindex, which calculates the Houtman-Maks index for a data set of prices and observed choices of a consumer. The command is illustrated with an empirical application.