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Revealed Preferences for Diamond Goods

Author

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  • Sam Cosaert

Abstract

When consumers care not only for the quantity but also the value of a product, it could be rational to purchase products as they become more expensive. This study provides nonparametric—revealed preference—conditions to measure consumers' marginal willingness to pay for value (i.e., diamondness) associated with particular goods. This is the first nonparametric test of price-dependent preferences. The proposed diamondness measure is applied to observational data from the Russia Longitudinal Monitoring Survey. The results show that this diamondness measure is related to a product's visibility to society, which indicates a certain degree of conspicuous consumption.

Suggested Citation

  • Sam Cosaert, 2018. "Revealed Preferences for Diamond Goods," American Economic Journal: Microeconomics, American Economic Association, vol. 10(2), pages 83-117, May.
    • Handle: RePEc:aea:aejmic:v:10:y:2018:i:2:p:83-117
    Note: DOI: 10.1257/mic.20150168
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    Cited by:

    1. Sam Cosaert & Veerle Hennebel, 2023. "Parental Childcare with Process Benefits," Economica, London School of Economics and Political Science, vol. 90(357), pages 339-371, January.
    2. Antonia Grohmann & Melanie Koch, 2022. "The Effect of Social Comparison on Debt Taking: Experimental Evidence," Discussion Papers of DIW Berlin 1996, DIW Berlin, German Institute for Economic Research.
    3. Victor H. Aguiar & Roberto Serrano, 2018. "Cardinal Revealed Preference, Price-Dependent Utility, and Consistent Binary Choice," Working Papers 2018-3, Brown University, Department of Economics.
    4. Florian H. Schneider, 2020. "Signaling ideology through consumption," ECON - Working Papers 367, Department of Economics - University of Zurich, revised Jul 2022.
    5. Sam Cosaert & Alexandros Theloudis & Bertrand Verheyden, 2023. "Togetherness in the Household," American Economic Journal: Microeconomics, American Economic Association, vol. 15(1), pages 529-579, February.
    6. Schlee, Edward E. & Ali Khan, M., 2023. "Money-metrics in local welfare analysis: Pareto improvements and equity considerations," Journal of Economic Theory, Elsevier, vol. 213(C).
    7. Ori Heffetz, 2018. "Expenditure Visibility and Consumer Behavior: New Evidence," NBER Working Papers 25161, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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    1. Revealed Preferences for Diamond Goods (AEJ:MI 2018) in ReplicationWiki

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