A note on the large sample properties of the welfare change estimator in linear-in-income logit

Paolo Delle Site

Journal of choice modelling, 2021, vol. 38, issue C

Abstract: In linear-in-income logit, a case with no income effect, the expectation ofthe compensating variation and the expectation of the equivalent variation are identical and provided by the logsum formula. The statistical properties of the estimator of this measure of welfare change are investigated. Under regularity conditions, the estimator of the measure obtained from maximum likelihood estimators of the utility coefficients is consistent, asymptotically normal and asymptotically efficient. Estimates are provided of the variance of the estimator of the measure, useful to derive large sample confidence bounds, and of the covariance of estimators of the measure in distinct scenarios, useful for large sample hypothesis testing.

Keywords: Compensating variation; Hypothesis test; Logit; Maximum likelihood estimators; Welfare change (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eejocm:v:38:y:2021:i:c:s1755534520300506

DOI: 10.1016/j.jocm.2020.100253

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