Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1446: Consistent Subsets: Computing the Houtman-Maks Index in Stata

Per Hjertstrand () and Marcos Demetry ()
Additional contact information
Per Hjertstrand: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Marcos Demetry: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: The Houtman-Maks index is a measure of the size of a violation of utility maximizing (i.e., rational) behavior. This note introduces the Stata command hmindex, which calculates the Houtman-Maks index for a data set of prices and observed choices of a consumer. The command is illustrated with an empirical application.

Keywords: hmindex; Houtman-Maks index; revealed preference; WGARP; WARP

JEL-codes: C87; D12

Language: English

10 pages, December 1, 2022

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