1997/07/01 by James C. Cox · 76 citations
Economics, Econometrics and Finance · Mathematics · #Alternative hypothesis #Axiom #Computer science #Core (optical fiber) #Econometrics #Economic theories and models #Economics #Economics of Agriculture and Food Markets #Expected utility hypothesis #Financial economics #Mathematical economics #Mathematics #Microeconomics #Monetary Policy and Economic Impact #Null hypothesis #Order (exchange) #Portfolio #Preference #Preference relation #Preference theory #Revealed preference #Set (abstract data type) #Statistical hypothesis testing #Statistics #Test (biology)
paper · doi:10.1111/j.1468-0297.1997.tb00007.x
published in The Economic Journal 107(443), 1054-1078 (Oxford University Press)
openalex publication_date 1997/07/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/27
In order to be able to conduct a test of the (core) utility hypolhesis that is not confounded with tests of (subsidiary) hypotheses that economic agents all have the same preferences and that their preferences are weakly separable, it is necessary to use data that are disaggregated and complete. In order 10 carry out a utility hypothesis test with complete data, revealed preference theory must first be extended. The generalised axiom of revealed preference is extended to include labour supply and portfolio choice. Then a complete, disaggregated data set is used to test the utility hypothesis and IWO preference separability hypotheses. By 'the utility hypothesis', I mean the hypothesis that real economic agents choose commodity bundles as if they maximise utility functions subject to binding budget constraints. The utility hypothesis has a long tradition in the history of economic thought and it currently has a central place in theoretical and applied economics and in economics education. In addition, this hypothesis is the foundation of the intellectual imperialism of economics: the use of utility maximisation to explain behaviour such as political choice (Buchanan and