Quantitative Economics
Journal Of The Econometric Society
Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331
Quantitative Economics: Mar, 2012, Volume 3, Issue 1
Measuring the price responsiveness of gasoline demand: Economic shape restrictions and nonparametric demand estimation
Richard Blundell, Joel L. Horowitz, Matthias Parey
This paper develops a new method for estimating a demand function and the wel-
fare consequences of price changes. The method is applied to gasoline demand in
the United States and is applicable to other goods. The method uses shape restric-
tions derived from economic theory to improve the precision of a nonparametric
estimate of the demand function. Using data from the U.S. National Household
Travel Survey, we show that the restrictions are consistent with the data on gaso-
line demand and remove the anomalous behavior of a standard nonparametric
estimator. Our approach provides new insights about the price responsiveness
of gasoline demand and the way responses vary across the income distribution.
We find that price responses vary non-monotonically with income. In particular,
we find that low- and high-income consumers are less responsive to changes in
gasoline prices than are middle-income consumers. We find similar results using
comparable data from Canada.
Keywords. Consumer demand, nonparametric estimation, gasoline demand,
deadweight loss.
JEL classification. D120, H310, C140
fare consequences of price changes. The method is applied to gasoline demand in
the United States and is applicable to other goods. The method uses shape restric-
tions derived from economic theory to improve the precision of a nonparametric
estimate of the demand function. Using data from the U.S. National Household
Travel Survey, we show that the restrictions are consistent with the data on gaso-
line demand and remove the anomalous behavior of a standard nonparametric
estimator. Our approach provides new insights about the price responsiveness
of gasoline demand and the way responses vary across the income distribution.
We find that price responses vary non-monotonically with income. In particular,
we find that low- and high-income consumers are less responsive to changes in
gasoline prices than are middle-income consumers. We find similar results using
comparable data from Canada.
Keywords. Consumer demand, nonparametric estimation, gasoline demand,
deadweight loss.
JEL classification. D120, H310, C140
Full Content: Print
Supplemental Material
Supplement to "Measuring the price responsiveness of gasoline demand: Economic shape restrictions and nonparametric demand estimation"
Journal News
March 5, 2024
Announcing the New Journal Editors
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
