SFB 303 Discussion Paper No. A - 496

Author: Evstigneev, Igor V., Werner Hildenbrand, and Michael Jerison
Title: Metonymy and Cross Section Demand
Abstract: Cross section consumer expenditure data are frequently used to make conclusions about consumer demand behavior. Such conclusions, however, can only be justified under certain assumptions, which are often left unstated in the empirical demand literature. An assumption of this type, the metonymy hypothesis, was stated rigorously and then exploited by Härdle, Hildenbrand and Jerison when analyzing the monotonicity property of aggregate demand functions. The purpose of the present paper is to examine the metonymy hypothesis in more detail. We prove that the distribution of demand vectors derived from a not necessarily metonymic population is identical to the distribution derived from some metonymic one. This implies, in particular, that the metonymy hypothesis cannot be rejected or confirmed on the basis of data from a single cross section.
Keywords: Cross section demand; Consumer expenditure data, Metonymy hypothesis, Law of Demand
Creation-Date: November 1995
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