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I’Ll Never Forget My First Cigarette: A Revealed Preference Analysis Of The “Habits As Durables” Model

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  • Thomas Demuynck
  • Ewout Verriest

Abstract

We provide a revealed preference analysis of the “habits as durables” model. This approach avoids the need to impose a functional form on the underlying utility function. We show that our characterization is testable by means of linear programming methods, and we demonstrate its practical usefulness by means of an application to cigarette consumption using a Spanish household consumption data set. We find that the “habits as durables” model has better empirical fit in terms of predictive success compared to the “short memory habits” and life cycle models.

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  • Thomas Demuynck & Ewout Verriest, 2013. "I’Ll Never Forget My First Cigarette: A Revealed Preference Analysis Of The “Habits As Durables” Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 717-738, May.
    • Handle: RePEc:wly:iecrev:v:54:y:2013:i:2:p:717-738
    DOI: iere.12012
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    Cited by:

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    2. Ian Crawford & Bram De Rock, 2014. "Empirical Revealed Preference," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 503-524, August.
    3. Pérez-Blanco, C. D & Standardi, G., 2019. "Farm waters run deep: a coupled positive multi-attribute utility programming and computable general equilibrium model to assess the economy-wide impacts of water buyback," Agricultural Water Management, Elsevier, vol. 213(C), pages 336-351.
    4. Julian Reif, 2019. "A Model Of Addiction And Social Interactions," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 759-773, April.
    5. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2018. "Transitivity of preferences: when does it matter?," Theoretical Economics, Econometric Society, vol. 13(3), September.
    6. Thomas Demuynck, 2015. "Statistical inference for measures of predictive success," Theory and Decision, Springer, vol. 79(4), pages 689-699, December.
    7. Federico Echenique, 2020. "New Developments in Revealed Preference Theory: Decisions Under Risk, Uncertainty, and Intertemporal Choice," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 299-316, August.
    8. Avner Seror, 2022. "The Priced Survey Methodology," AMSE Working Papers 2224, Aix-Marseille School of Economics, France.
    9. Ian Crawford & Matthew Polisson, 2015. "Demand Analysis with Partially Observed Prices," Discussion Papers in Economics 15/12, Division of Economics, School of Business, University of Leicester, revised Dec 2016.
    10. Frank A. Sloan, 2020. "Drinking and Driving," NBER Working Papers 26779, National Bureau of Economic Research, Inc.
    11. 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.
    12. Crawford, Ian & Polisson, Matthew, 2014. "Testing for intertemporal nonseparability," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 46-49.
    13. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2018. "Transitivity of preferences: when does it matter?," Theoretical Economics, Econometric Society, vol. 13(3), September.
    14. Demuynck, Thomas & Hjertstrand, Per, 2019. "Samuelson's Approach to Revealed Preference Theory: Some Recent Advances," Working Paper Series 1274, Research Institute of Industrial Economics.
    15. Sam Cosaert & Tom Potoms, 2024. "Intertemporal Consumption With Anticipating, Remembering, And Experiencing Selves," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(3), pages 1283-1322, August.
    16. Hjertstrand, Per & Swofford, James L. & Whitney, Gerald A., 2020. "Testing for Weak Separability and Utility Maximization with Incomplete Adjustment," Working Paper Series 1327, Research Institute of Industrial Economics, revised 30 May 2023.
    17. Thomas Demuynck & Tom Potoms, 2022. "Testing revealed preference models with unobserved randomness: a column generation approach," Working Papers ECARES 2022-42, ULB -- Universite Libre de Bruxelles.

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