JOURNAL FILE- A. Allan Schmid September 22, 1999

Individuals and Individual Acts of Choice as the Unit of Observation

Sen, "our love of variety makes it illegitimate to consider individual acts of choice as the proper units (rather than sequences of choices) while, on the other hand, a lapse of time makes it difficult to distinguish between inconsistencies and changing tastes."

Much is made of substitution in response to changed prices given a budget constraint. But the budget constraint time frame is not a given, but a matter of perception. I can continue my present daily purchases in the face of changed prices given a budget of x/365 days or x/30 days or whatever. Whatever day I choose to make my purchases fit my budget accomplishes the budget constraint, but if I wait, there is no way that I can make the period's consumption bundle fit some prior set of preferences.

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