Measuring Revealed Preference Hypothesis of the Theory of Consumer Behaviour Using Roy’s Identity: A Case Study of Oriade LGA of Osun State, Nigeria

Benjamine Badeji Omoniyi, Kasie Ofoezie, Oyejide Oluwamayowa Ogunwole

Abstract


The paper examines whether the Roy’s identity is applicable to the measurement of revealed preference hypothesis in Oriade LGA of Osun State, Nigeria using iteration technique. The paper revealed that Milo, a brand of beverages is most preferred because a greater percentage of the households consume Milo. In terms of preference, Bournvita came second preferred while Nescafe was least favoured. The iteration result shows that expenditure on Milo and Bournvita was positive and significant for total expenditure on beverages. However, the consumption of Nescafe proved insignificant. The iteration result finally shows that convergence takes place meaning that the Roy’s identity is applicable in the measurement of the revealed preference of the 120 households considered in the paper. The paper concludes that producers of beverages should increase the supply of Milo and Bournvita to the area while the producers of Nescafe should endeavour to find out why their product was least favoured.


Keywords


Revealed preference; Roy’s identity; Iteration; Applicable and Convergence

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DOI: http://dx.doi.org/10.3968/5969

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