The article compares different economic models to see which one best fits real-world data on consumption and income. By using a simple Bayesian approach, the researchers found that a model with both risk aversion and discount factor heterogeneity is unlikely to have generated the data. They also discovered that the values of the unemployment rate in booms and expansions greatly impact the relationship between consumption and income. This suggests that the accuracy of welfare effects calculations can be significantly affected by these parameters.