**Author**:
Jerison, David, and Michael Jerison**Title**: Commodity Aggregation
and Slutysky Asymmetry**Abstract**: Consumer expenditure data often
violate the revealed preference axioms. The observed revealed preference
inconsistencies must be measured in order to judge the extent to which
optimizing models misrepresent demand behavior. This paper considers the
"sizes" of violations of the Ville axiom, a differential revealed preference
axiom that is equivalent to Slutsky symmetry. We study the effect to
commodity aggregation is justified in the sense that it generates a
well-defined aggregated demand function. Using a natural measure of Slutsky
asymmetry and Ville axiom violation, we show that commodity aggregation can
either expand or eliminate the revealed preference inconsistency. We obtain
an upper bound on the increase in the maximal sizes of Ville axiom
violations duee to commodity aggregation. The Slutsky asummetry norm of the
aggregated demand can be larger than that of the original demand function by a factor
that is not greater than the squareroot of nm/N, where N is the number of
goods in the original demand system, m is the number of goods that are
aggregated, and n=N-m+1 is the number of goods in the aggregated
system.**Keywords**:Slutsky symmetry, Ville axiom, revealed
preference, commodity aggregation **JEL-Classification-Number**: D11**Creation-Date**: January 1994

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