Empirical welfare analysis with hedonic budget constraints

Debopam Bhattacharya, Ekaterina Oparina and Qianya Xu

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We analyze demand settings where heterogeneous consumers maximize utility for product attributes subject to a nonlinear budget constraint. We develop nonparametric methods for welfare-analysis of interventions that change the constraint. Two new findings are Roy's identity for smooth, nonlinear budgets, which yields a Partial Differential Equation system, and a Slutsky-like symmetry condition for demand. Under scalar unobserved heterogeneity and single-crossing preferences, the coefficient functions in the PDEs are nonparametrically identified, and under symmetry, lead to path-independent, money-metric welfare. We illustrate our methods with welfare evaluation of a hypothetical change in relationship between property rent and neighborhood school-quality using British microdata.

Keywords: hedonic model; nonlinear budget; nonparametric identification; welfare; compensating/equivalent variation; partial differential equation; slutsky symmetry; roy's identity; path independence (search for similar items in EconPapers)
JEL-codes: C14 H23 I30 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2024-11-08
New Economics Papers: this item is included in nep-upt
References: Add references at CitEc
Citations:

Downloads: (external link)
http://eprints.lse.ac.uk/126792/ Open access version. (application/pdf)

Related works:
Working Paper: Empirical Welfare Analysis with Hedonic Budget Constraints (2024)
Working Paper: Empirical Welfare Analysis with Hedonic Budget Constraints (2024)
Working Paper: Empirical welfare analysis with hedonic budget constraints (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:126792

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().