Downloads
WP201511.pdf
PDF | 367.7 KB
A 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.
Authors
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
Research Associate University of Copenhagen
Martin is an IFS Research Associate, a Nuffield Senior Research Fellow and a Professor of Economics at the University of Oxford.
Ian Crawford
Research Fellow University of Oxford
Abi's research sits within Applied Microeconomics, often focused on the econometrics of consumer and family choice.
Working Paper details
- DOI
- 10.1920/wp.ifs.2015.1511
- Publisher
- IFS
Suggested citation
Adams-Prassl, A et al. (2015). Prices versus preferences: taste change and revealed preference. London: IFS. Available at: https://ifs.org.uk/publications/prices-versus-preferences-taste-change-and-revealed-preference (accessed: 9 November 2024).
More from IFS
Understand this issue
What does the Budget mean for the UK?
We discuss the Chancellor's first Budget and what impact the changes could have.
31 October 2024
How can Rachel Reeves make her first Budget a success?
We’re look at some of the challenges facing the Chancellor and what she can learn from previous Budgets.
24 October 2024
We can’t have any more budgets where speculation is running wild
Rachel Reeves needs to deliver a clear statement of intent for the remainder of this government’s time in office
28 October 2024
Policy analysis
François Gerard announced as new TaxDev Research Director
We are pleased to announce the appointment of François Gerard as TaxDev’s new Research Director.
8 November 2024
Autumn Budget 2024: IFS analysis
At this online webinar IFS researchers presented their initial response to new Chancellor Rachel Reeves' first Budget.
Share of deaths subject to inheritance tax
By 2029–30, the share of deaths liable for inheritance tax is forecast to rise to reach its highest level in over 50 years.
31 October 2024
Academic research
Wage effects of means-tested transfers: Incidence implications of using firms as intermediaries
We show that how countries disburse tax credits matters for economic incidence by exploiting reform to the disbursement of child benefits in Argentina
22 October 2024
Tax preferences and housing affordability: Exploration using a life-cycle model
We present a dynamic life-cycle model of demand for housing, including owner occupied housing, investment property and liquid assets.
21 October 2024
The effect of tax incentives on retirement saving
This paper estimates the responsiveness of retirement saving to tax incentives for employees in Great Britain.
15 October 2024