Nonparametric Welfare Analysis
Author(s)Hausman, Jerry A; Newey, Whitney K
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Exact consumer's surplus and deadweight loss are the most widely used welfare and economic efficiency measures. These measures can be computed from demand functions in straightforward ways. Nonparametric estimation can be used to estimate the welfare measures. In doing so, it seems important to account correctly for unobserved heterogeneity, given the high degree of unexplained demand variation often found in applications. This review surveys work on nonparametric welfare analysis, focusing on work that allows for general heterogeneity in demand, such as that of Hausman & Newey (2016). Keywords: consumer surplus, deadweight loss, identification, quantiles
DepartmentMassachusetts Institute of Technology. Department of Economics
Annual Review of Economics
Hausman, Jerry A., and Whitney K. Newey. “Nonparametric Welfare Analysis.” Annual Review of Economics, vol. 9, no. 1, Aug. 2017, pp. 521–46.