# Characteristics

Reference work entry

First Online:

**DOI:**https://doi.org/10.1057/978-1-349-95189-5_494

## Abstract

If Eve had not insisted that ‘an apple is an apple is an apple’, Adam would probably have brought down the wrath of Jehovah himself by characterizing things, unsurprisingly, by their characteristics, thus bringing man-made order into chaos. There remains the problem: what characteristics? Here a little mathematics is useful. Suppose goods and the total value of a bundle in an obvious notation, so that expenditurefor all

*Y*are sold only in bundles*X*, and that there are*a*_{ij}units of*Y*_{j}in*X*_{i}. The total quantity of it will be$$ {y}_j\sum_i{a}_{ij}{x}_i, $$

*X*_{i}$$ {p}_i\sum_j{a}_{ij}{q}_j, $$

$$ \sum_i{p}_i{x}_i=\sum_{ij}{a}_{ij}{q}_i{x}_i=\sum_j{q}_j{y}_j, $$

*q, x*, and expenditure,*m*, is invariant, a fact brought to the attention of young economists at large by Samuelson when he published his*Foundations*just after the war. That immediately suggested that we might instead consider the*X*as goods, thought of as bundles of characteristics*Y*. Were we to try \( {y}_j={f}^j(x),{p}_i={g}^i(q) \), instead of Eqs. 1 and 2, the notion that total expenditure should be invariant would yield \( m=\sum {g}^i(q){x}_i\equiv \sum {q}_j{f}^j(x) \), so that \( {\partial}^2m/\partial {x}_i\partial {q}_j={f}_i^j(x)={g}_j^i(q)={a}_{ij} \) say, the subscripts denoting differentiation, and hence back to the linear characteristics model (Eqs. 1 and 2), which had already been used extensively, if implicitly, by Rowntree when studying working-class budgets in York before and after World War I, by Miss Schulz in her monthly ‘human needs’ budgets during World War II, by numerous nutritionists, and finally by Stigler, in a paper cited in Koopmans’ Cowles Commission monograph on activity analysis in 1951 as a precursor of linear programming, a topic very fashionable among young economists at the time.This is a preview of subscription content, log in to check access

### Bibliography

- Caplin, P., and Nalebuff, B. 1986. Multidimensional product differentiation and price competition.
*Oxford Economic Papers*38.Google Scholar - Cubbin, J. 1975. Quality change and pricing behaviour in the United Kingdom car industry 1956–68.
*Economica*42: 43–58.CrossRefGoogle Scholar - Domencich, T.A., and D. McFadden. 1975.
*Urban travel demand*. Amsterdam: North Holland.Google Scholar - Gorman, W.M. 1956. A possible procedure for analysing quality differentials in the egg market. Journal paper No. 3129, Iowa Agricultural Experiment Station, and
*Review of Economic Studies*(1980) 47: 843–856.Google Scholar - Hausman, J., and D. Wise. 1978. A conditional probit model for qualitative choice: Discrete decisions recognising interdependence and heterogeneous preferences.
*Econometrica*46: 403–426.CrossRefGoogle Scholar - Hotelling, H. 1933. Analysis of a complex of statistical variables into principal components.
*Journal of Educational Psychology*24: 417–444. and 498–520.CrossRefGoogle Scholar - Houthakker, H.S. 1952. Compensated changes in quantities and qualities consumed.
*Review of Economic Studies*19: 154–184.CrossRefGoogle Scholar - Ironmonger, D.S. 1972.
*New commodities and consumer behaviour*. Cambridge: Cambridge University Press.Google Scholar - Koopmans, T.C. (ed.). 1951.
*Activity analysis of production and allocation*. New York: Wiley.Google Scholar - Lancaster, K.J. 1966. A new approach to consumer theory.
*Journal of Political Economy*74: 132–157.CrossRefGoogle Scholar - Luce, R.D. 1959.
*Individual choice behaviour*. New York: Wiley.Google Scholar - McFadden, D. 1981. Econometric models of probabilistic choice. In
*Structural analysis of discrete data with econometric applications*, ed. C.F. Manski and D. McFadden. Cambridge, MA: MIT Press.Google Scholar - Quandt, R. 1956. Probabilistic theory of consumer behaviour.
*Quarterly Journal of Economics*70: 507–536.CrossRefGoogle Scholar - Rowntree, P.S. 1918.
*The human needs of labour*. London: Nelson.Google Scholar - Samuelson, P.A. 1947.
*Foundations of economic analysis*. Cambridge, MA: Harvard University Press.Google Scholar - Schultz, T. 1943–59. Bulletin of the Oxford University Institute of Statistics, various issues.Google Scholar
- Stigler, G.J. 1945. The cost of subsistence.
*Journal of Farm Economics*27: 303–314.CrossRefGoogle Scholar - Stone, J.R.N. 1947. On the interdependence of blocks of transactions.
*Journal of the Royal Statistical Society (Supplement)*9: 1–45.CrossRefGoogle Scholar - Winston, C. 1981. A multinational probit prediction of the demand for domestic ocean container services.
*Journal of Transport Economics and Policy*15: 23–42.Google Scholar

## Copyright information

© Macmillan Publishers Ltd. 2018