Nonparametric Welfare Analysis

Jerry A. Hausman () and Whitney Newey
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Jerry A. Hausman: Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142

Annual Review of Economics, 2017, vol. 9, issue 1, 521-546

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: C10 C14 C51 C54 (search for similar items in EconPapers)
Date: 2017
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