Mutually consistent revealed preference bounds. Revise and Resubmit at American Economic Journal: Microeconomics.

Prices versus Preferences: Rationalising Tobacco Consumption  with M. Browning, R. Blundell & I. Crawford


Revealed Preference Heterogeneity. Job Market Paper.

Discrete Choice & Inattention. with J. Abaluck

Gender Differences in the Enforcement of Employment Rights

Measuring Poverty with Consumption and Income: What Difference Does It Make? with M. Brewer, C. O’Dea


Prices versus Preferences: Rationalising Tobacco Consumption

(with M. Browning, R. Blundell & I. Crawford)

This paper addresses the questions of data consistency and recoverability for models that introduce taste change to the basic rational choice framework. We draw upon our theoretical results to develop a practical algorithm that allows one to compute the lower bound on the intertemporal and interpersonal variation in marginal utility that is required to rationalise a finite set of observations on past choice behaviour. We apply this methodology to rationalise the patterns that have been observed in U.K. tobacco consumption since 1980. Psuedo cohorts are constructed from the U.K. Family Expenditure Survey and their demands are recovered along “Sequential Maximum Power” paths using censored quantile regression techniques. It is found that taste change is a necessary component of any rationalisation of observed trends. Our analysis also uncovers evidence of significant educational differences in the “effective” and “raw” taste trajectories for tobacco.


Mutually consistent revealed preference bounds

Revealed preference restrictions are increasingly used to bound demand responses and as shape restrictions in nonparametric estimation exercises. However, the restrictions imposed are not sufficient for rationality when predictions are made at more than a single price regime. We highlight the nonlinearities in revealed preference restrictions and the nonconvexities in the set of predictions that arise when making multiple predictions. We develop a mixed integer programming characterisation of the problem that can be used to impose rationality on multiple predictions. The approach is applied to the UK Family Expenditure Survey to recover jointly rational nonparametric estimates of income expansion paths.

Revealed Preference heterogeneity

Featured as a Vox EU JMP article.

Evaluating the merits of alternative tax and incomes policies often requires knowledge of their impact on consumer demand and welfare. Attempts to quantify these impacts are complicated; aggregate demand responses depend on the population distribution of preferences for commodities, yet consumer preferences go unobserved and economic theory places few restrictions on their form and distribution. These complications become especially acute when individuals are making choices over many goods because transitivity must be imposed for rationality of demand predictions and simultaneity must be addressed. In this paper, I develop a revealed preference methodology to bound demand responses and welfare effects in the presence of unobserved preference heterogeneity for many-good demand systems. My method does not rely on sample budgets having a continuous density, which is especially useful for high dimensional data. I first derive the revealed preference restrictions that are implied by a simple random utility model, and then develop these inequalities into a linear programming problem that allows for the recovery of the model’s underlying structural functions. I show how the feasible set of this linear programme can be used to construct virtual prices that enable one to conduct positive and normative analysis for heterogeneous agents. The utility of this approach is demonstrated through an application to household scanner data in which multidimensional preference parameters are recovered and individual demands and the sample demand distribution are predicted for hypothesised price changes.