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Abstract

The Houtman-Maks index is a measure of the size of a violation of utility maximizing (i.e. rational) behavior. This note introduces the Stata command hmindex, which calculates the Houtman-Maks index for a data set of prices and observed choices of a consumer. The command is illustrated with an empirical application.

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Citation

Demetry, M. and Hjertstrand, P., 2023. Consistent Subsets: Computing the Houtman-Maks index in Stata. The Stata Journal, 23(2), pp.578–588.

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