Testing data for consistency with revealed preference

We develop a method of hypothesis testing for revealed preference tests. This method is particularly well suited to tests of commonality of tastes or tests of preference stability. We devise a metric based on an estimate of the fraction of expenditure wasted in maximizing utility if all consumers in the sample share the same utility function. This metric increases in size with increases in the proportion of observations having different tastes and with increasing differences in tastes. We propose bootstrap methods for estimating the distribution of the test statistic.