Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192413 
Year of Publication: 
2005
Series/Report no.: 
Discussion Papers No. 431
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
The paper proposes a particular approach to model the utility of income. We develop a theoretical framework that restricts the class of admissible functional forms and distributions of the random components of the model. The theoretical approach is based on theories of probabilistic choice and ideas that are used in modern psychophysical research. From our theoretical framework, we obtain the empirical model and the corresponding likelihood function. The empirical analysis is based on a "Stated Preference" survey. The model fits the data quite well. Finally, we discuss the concept of cardinality and the implications for consumer demand relations.
Subjects: 
Utility of income
Random utility
Invariance principles
JEL: 
B21
D19
Document Type: 
Working Paper

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