Working Paper No. 1324

Income Elasticities Without Parameters

Published: March 17, 2020Pages: 14Keywords: Income elasticity; Non-parametric; Revealed preference; SSARPJEL-codes: D11; D12

Income Elasticities Without Parameters Per Hjertstrand

This paper proposes a simple non-parametric framework to calculate income elasticities from a data set of observed prices and consumed quantities without having to estimate any parameters. The framework can be applied when the price-quantity data satisfies a revealed preference axiom called the strong version of the strong axiom of revealed preference (SSARP). The framework is used to calculate income elasticities for food and non-alcoholic drinks from a rich panel of household expenditures. For this category, it is found that households are rather homogeneous in their demand responses.


Hjertstrand, Per (2020), "Income Elasticities Without Parameters". IFN Working Paper No. 1324. Stockholm: Research Institute of Industrial Economics.

Per Hjertstrand


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