Adaptation and income. The case of Uruguay

Vigorito, Andrea, and Gonzalo Salas (2009). "Adaptation and income. The case of Uruguay" Paper presented at the 6th annual conference of the HDCA, 10-12 September 2009, Lima, Peru.

Empirical studies of adaptive preferences for developing countries are scarce. Based on Burchardt (2005) we analyze adaptation to income in Uruguay considering the role of past income and reference groups. We use two different panel data surveys to check the validity of our results. Our main findings show that adaptation to the preferences of reference groups is significant whereas past income is not.
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