Extent of Irrationality of the Consumer: Combining the Critical Cost Efficiency and Hautman Maks Indices

In this thesis, we use the Critical Cost Efficiency Index and the Hautman Maks Index to evaluate the consistency of subjects in the dataset. As a result, we show that by simply allowing subjects for one significant mistake (by removing the worst observation with the highest wasted budget), the consistency of the dataset increases by 6 percentage points. Furthermore, we demonstrate that by excluding the worst observation per subject, the fraction of subjects wasting 5% or less of their budget increases from 45% to 64%. Therefore, the larger and more consistent dataset can be used for further study. Finally, we apply the aforementioned findings to various socio-economic groups. The results indicate that the highest improvement in terms of the efficiently spent budget can be seen among retired an 65+ aged subjects.