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Working Paper No. 1342

Testing Axioms of Revealed Preference in Stata

Working Paper
Demetry, Marcos, Per Hjertstrand and Matthew Polisson (2020). “Testing Axioms of Revealed Preference in Stata”. IFN Working Paper No. 1342. Stockholm: Research Institute of Industrial Economics (IFN).

Marcos Demetry, Per Hjertstrand, Matthew Polisson

The revealed preference approach in economics is central to the empirical analysis of consumer behavior. This paper introduces the Stata commands checkax, aei, and powerps as a bundle within the package rpaxioms. The first command allows a user to test whether consumer expenditure data satisfy a number of revealed preference axioms; the second command calculates measures of goodness-of-fit when the data violate these axioms; and the third command calculates power against uniformly random behavior as well as predictive success for each axiom. The commands are illustrated using individual-level experimental data and household-level aggregate consumption data.