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{{expert-subject|1=Economics|date=November 2012}}
{{expert-subject|1=Economics|date=November 2012}}
{{mergeto|Revealed preference|discuss=Talk:Revealed preference#Demonstrated preference|date=December 2012}}
{{mergeto|Revealed preference|discuss=Talk:Revealed preference#Demonstrated preference|date=December 2012}}
'''Demonstrated preference''' is a concept in economics that states that people's spending (time/money) decisions [[Preference revelation|reveal their true values]]. Unlike [[revealed preference]], it does not assume that people's preferences are constant or fixed over time.
'''Demonstrated preference''' is a theory, stated by Murray Rothbard, which asserts that people's spending decisions reveal their true preferences.[http://mises.org/rothbard/toward.pdf Toward a Reconstruction of Utility and Welfare Economics]
==Rothbard's Statement==

==Passages==
{{quotefarm|section|date=December 2012}}
:The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale. Similarly, if a man spends five dollars on a shirt we deduce that he preferred purchasing the shirt to any other uses he could have found for the money. This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis, and particularly of utility and welfare analysis. - [[Murray Rothbard]], [http://mises.org/rothbard/toward.pdf Toward a Reconstruction of Utility and Welfare Economics]
:The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale. Similarly, if a man spends five dollars on a shirt we deduce that he preferred purchasing the shirt to any other uses he could have found for the money. This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis, and particularly of utility and welfare analysis. - [[Murray Rothbard]], [http://mises.org/rothbard/toward.pdf Toward a Reconstruction of Utility and Welfare Economics]

:Economics Joke #l: Two economists walked past a Porsche showroom. One of them pointed at a shiny car in the window and said, "I want that." "Obviously not," the other replied. - [[David D. Friedman]], [http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Chapter_2/PThy_CHAP_2.html How Economists Think]

:Kahn and Baron’s (1995) results represent additional evidence in support of psychologists’ assertion that contrary to rational choice theory, people do not always hold stable and clearly ordered preferences that are simply retrieved at the moment of the choice. On the contrary, according to psychology research, most of the time, people do not know their preferences before their decision-making task, but they construct them on the spot during the decision process; therefore, preferences are subject to contextual influences (Feldman and Lynch 1988; Payne, Bettman, and Johnson 1993). - Simona Botti and Sheena S. Iyengar, [http://faculty.london.edu/sbotti/assets/documents/Dark_side_of_choice.pdf The Dark Side of Choice]

:Individuals do not act so as to maximize utilities described in ''independently existing functions''. They confront genuine choices, and the sequence of decisions taken may be conceptualized, ''ex post'' (after the choices), in terms of "as if" functions that are maximized. But these "as if" functions are, themselves, generated in the choosing process, not separately from such process. - [[James M. Buchanan]], [http://oll.libertyfund.org/?option=com_content&task=view&id=163&Itemid=282 Order Defined in the Process of its Emergence]


==See also==
==See also==
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*[[Trade-off]]
*[[Trade-off]]


==References==


* Maricano, Alain - [http://hope.econ.duke.edu/sites/default/files/Buchanan%20externalities%20marciano.pdf Why markets do not fail. Buchanan on voluntary cooperation and externalities] 2010
* Ginsburg, Douglas and Wright, Joshua - [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2147940 Behavioral Law and Economics: Its Origins, Fatal Flaws, and Implications for Liberty]


[[Category:Consumer theory]]
[[Category:Consumer theory]]

Revision as of 17:44, 15 January 2013

Demonstrated preference is a theory, stated by Murray Rothbard, which asserts that people's spending decisions reveal their true preferences.Toward a Reconstruction of Utility and Welfare Economics

Rothbard's Statement

The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale. Similarly, if a man spends five dollars on a shirt we deduce that he preferred purchasing the shirt to any other uses he could have found for the money. This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis, and particularly of utility and welfare analysis. - Murray Rothbard, Toward a Reconstruction of Utility and Welfare Economics

See also

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