THE IMPORTANCE OF FUNCTIONAL FORM IN THE ESTIMATION OF WELFARE

Catherine Kling

Western Journal of Agricultural Economics, 1989, vol. 14, issue 01, 7

Abstract: Researchers have recognized the central role that the choice of functional form has on estimated of consumer surplus. The purpose of this paper is to quantify the magnitude of errors which might arise from the use of incorrect functional forms. It describes a simulation experiment where estimated consumer surplus, based on simulated data sets, is compared with consumer surplus computed directly from the simulate data. The errors resulting from the use of mismatching functional forms range from approximately 4% to 107%.

Keywords: Institutional and Behavioral Economics; Research Methods/Statistical Methods (search for similar items in EconPapers)
Date: 1989
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Citations: View citations in EconPapers (18)

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Related works:
Working Paper: Importance of Functional Form in the Estimation of Welfare (The) (1989)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:wjagec:32452

DOI: 10.22004/ag.econ.32452

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