Abstract
When the consumer’s tastes are close to preference independence, each transformed good is uniquely associated with one observed good. The off-diagonal elements of the composition matrix of the transformation are equal apart from sign and are inversely proportional to the difference between the income elasticities of the corresponding observed goods.
This article first appeared in Economics Letters, 5 (1980), 281–284. Reprinted with the permission of Elsevier Science Publishers B.V. (North-Holland). Research supported in part by NSF Grant SOC76-82718.
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© 1992 Springer Science+Business Media Dordrecht
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Theil, H. (1992). The Independence Transformation under Almost Additivity. In: Raj, B., Koerts, J. (eds) Henri Theil’s Contributions to Economics and Econometrics. Advanced Studies in Theoretical and Applied Econometrics, vol 25. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2408-9_13
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DOI: https://doi.org/10.1007/978-94-011-2408-9_13
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