Martin Browning
-
-
Never mind the hyperbolics: nonparametric analysis of time-inconsistent preferences
July 2014|Scholarly editionWe investigate necessary and sufficient nonparametric conditions for the quasi-hyperbolic consumer. These turn out to be quite tractable. We investigate the performance of this model compared to the standard exponential discounting model using consumer panel data. -
Economics of the Family
January 2014|Book -
Study versus television
January 2014|Journal article|IZA Journal of Labor Economics -
The measurement of household consumption expenditures
January 2014|Journal article|Annual Review of EconomicsHousehold-level data on consumer expenditures underpin a wide range of empirical research in modern economics, spanning micro-and macroeconomics. This research includes work on consumption and saving, on poverty and inequality, and on risk sharing and insurance. We review different ways in which such data can be collected or captured: traditional detailed budget surveys, less onerous survey procedures that might be included in more general surveys, and administrative or process data. We discuss the advantages and difficulties of each approach and suggest directions for future investigation. © 2014 by Annual Reviews. All rights reserved.
-
Department of Economics Discussion Paper Series
Nonparametric Analysis of Time-Inconsistent Preferences
September 2017|Working paper|Department of Economics Discussion Paper SeriesAbstract This paper provides a revealed preference characterisation of quasi-hyperbolic discounting which is designed to be applied to readily-available expenditure surveys. We describe necessary and sufficient conditions for the leading forms of the model and also explore the consequences the restrictions on preferences popularly used in empirical lifecycle consumption models. Using data from a household consumption panel dataset we explore the prevalence of time-inconsistent behaviour. The sophisticated quasi-hyperbolic model provides a significantly more successful account of behaviour than the alternatives considered. We estimate the joint distribution of time preferences and the distribution of discount functions at various time horizons.Quasi-hyperbolic discounting, revealed preference -
Prices versus preferences: taste change and revealed preference
March 2015|Working paperA systematic approach for incorporating taste variation into a revealed preference framework for heterogeneous consumers is developed. We create a new methodology that enables the recovery of the minimal variation in tastes that are required to rationalise observed choice patterns. This approach is used to examine the extent to which changes in tobacco consumption have been driven by price changes or by taste changes, and whether the significance of these two channels varies across socioeconomic groups. A censored quantile approach is used to allow for unobserved heterogeneity and censoring of consumption. Statistically significant educational differences in the marginal willingness to pay for tobacco are recovered. More highly educated cohorts are found to have experienced a greater shift in their effective tastes away from tobacco. -
Department of Economics Discussion Paper Series
Dynamic binary outcome models with maximal heterogeneity
April 2009|Working paper|Department of Economics Discussion Paper SeriesMost econometric schemes to allow for heterogeneity in micro behaviour have two drawbacks: they do not fit the data and they rule out interesting economic models. In this paper we consider the time homogeneous first order Markov (HFOM) model that allows for maximal heterogeneity. That is, the modelling of the heterogeneity does not impose anything on the data (except the HFOM assumption for each agent) and it allows for any theory model (that gives a HFOM process for an individual observable variable). 'Maximal' means that the joint distribution of initial values and the transition probabilities is unrestricted. We establish necessary and sufficient conditions for the point identification of our heterogeneity structure and show how it depends on the length of the panel. A feasible ML estimation procedure is developed. Tests for a variety of subsidiary hypotheses such as the assumption that marginal dynamic effects are homogeneous are developed. We apply our techniques to a long panel of Danish workers who are very homogeneous in terms of observables. We show that individual unemployment dynamics are very heterogeneous, even for such a homogeneous group. We also show that the impact of cyclical variables on individual unemployment probabilities differs widely across workers. Some workers have unemployment dynamics that are independent of the cycle whereas others are highly sensitive to macro shocks.Discrete choice, Markov processes, Nonparametric identification, Unemployment dynamics -
Department of Economics Discussion Paper Series
Pooling of income and sharing of consumption within households
April 2009|Working paper|Department of Economics Discussion Paper SeriesThere are extensive literatures within economics and economic psychology on the allocation of household income within the household. These two literatures are largely disjoint but both use a concept of 'income pooling'. In economics this refers to the independence of household decisions from who receives the income within the household. In economic psychology it refers to the management of household finances. This article uses a new Danish expenditure survey that gives information on both concepts and on the assignment of expenditures to consider the link between the two. More importantly, we investigate whether either type of pooling is related to the sharing of expenditures between the two partners. We find that sharing does depend on who receives the income within non-pooling households, but not on the economic psychological income pooling regime per se.Household production and intra-household allocation, Personal income, wealth and their distributions, Methodology for collecting, estimating, and organizing microeconomic data, Marriage and family -
Department of Economics Discussion Paper Series
Distributional effects in household models: separate spheres and income pooling
November 2006|Working paper|Department of Economics Discussion Paper SeriesWe derive distributional effects for a non-cooperative alternative to the unitary model of household behaviour. We consider the Nash equilibria of a voluntary contributions to public goods game. Our main result is that, in general, the two partners either choose to contribute to different public goods or they contribute to at most one common good. The former case coresponds to the separate spheres case of Lundberg and Pollak (1993). The second outcome yields (local) income pooling. A household will be in different regimes depending on the distribution of income within the household. Any bargaining model with this non-cooperative case as a breakdown point will inherit the local income pooling. We conclude that targeting benefits such as child benefits to one household member may not always have an effect on outcomes.Nash Equilibrium, Nash Bargaining, Collective Models, Intra-Household Allocation, Local Income Pooling, Separate Spheres
