<p>We know Slutsky equation decomposes the price effect into substitution effect and income effect, where the substitution effect is the partial derivative of Hicksian demand function against the change of price.</p>
<p>So it seems this substitution effect comes from Hicksian method rather than Slutsky method? I mean, this effect is found by using Hicksian compensation that keeps utility unchanged?</p>
<p>Any clarification?</p>

CC BY-SA 4.0
2024-01-23T09:08:31.290Z
Have you tried replicating the derivation using Slutsky compensation and Marshallian demand?
Giskard
CC BY-SA 4.0
2024-01-23T09:13:50.643Z
The naming is definitely retroactive as Hicks was 11 when Slutsky's paper came out.
Giskard
CC BY-SA 4.0
2024-01-23T10:17:12.737Z
It simply states that the price derivatives of Hicksian demand function is the Slutsky substitution matrix, but I don't know how
Nonenicht
<microeconomics><consumer-theory><elasticity-of-substitution><slutsky-equation>
substitution effect in slutsky equation
Nonenicht
# substitution effect in slutsky equation

(Asked by: username_0 on 2024-01-23)

We know Slutsky equation decomposes the price effect into substitution effect and income effect, where the substitution effect is the partial derivative of Hicksian demand function against the change of price.

So it seems this substitution effect comes from Hicksian method rather than Slutsky method? I mean, this effect is found by using Hicksian compensation that keeps utility unchanged?

Any clarification?

**Tags:** microeconomics, consumer-theory, elasticity-of-substitution, slutsky-equation
> **Comments:**
> **username_1**: Have you tried replicating the derivation using Slutsky compensation and Marshallian demand?  
> **username_1**: The naming is definitely retroactive as Hicks was 11 when Slutsky's paper came out.  
> **username_0**: It simply states that the price derivatives of Hicksian demand function is the Slutsky substitution matrix, but I don't know how  

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## 0 answers

