Lecture Notes in Economics and Mathematical Systems

Basmann, R.L.; Slottje, D.J.; Hayes, K.; Johnson, J.D.; Molina, D.J.

In this book the foundations and applicability of the Generalized Fechner-Thurstone Utility Function are laid out. It is shown how by removing the constraint of fixed preferences in the neoclassical consumer theory, utility theory can be used to develop non-parametric indices along with elasticities of the marginal rates of substitutions. It is also shown that whereas the existence of a fixed preference utility function is not always guaranteed for different demand functions, there will always exist at least one Generalized Fechner-Thurstone Direct Utility Function. Furthermore, analysis using the Fechner-Thurstone Direct Utility Function is clear and simple and does not rely on ad hoc Taylor expansions. The construction of different true-cost-of-living indices, the comparison of North American consumers, and a habit formation model are developed to show the usefulness of the Generalized Fechner-Thurstone Direct Utility Function.

Details

Published by: Springer

Publication Date: 1988-12-06

Format: Paperback

ISBN-13: 9780387968537

DOI: 10.1007/978-1-4684-9401-3

Dimensions: 210cm x148cm

Pages: 159