Empirical welfare economics

Christopher Chambers and Federico Echenique ()
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Federico Echenique: Deparatment of Economics, University of California Berkeley

Theoretical Economics, Forthcoming

Abstract: Welfare economics relies on access to agents' utility functions: we revisit classical questions in welfare economics, assuming access to data on agents' past choices instead of their utilities. Our main result considers the existence of utilities that render a given allocation Pareto optimal. We show that a candidate allocation is efficient for some utilities consistent with the choice data if and only if it is efficient for an incomplete relation derived from the revealed preference relations and convexity. Similar ideas are used to make counterfactual choices for a single consumer, policy comparisons by the Kaldor criterion, and offer bounds on the degree of inefficiency in a Pareto suboptimal allocation.

Keywords: Revealed preference theory; welfare economic; general equilibrium (search for similar items in EconPapers)
JEL-codes: D12 D61 (search for similar items in EconPapers)
Date: 2024-11-20
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http://econtheory.org/ojs/index.php/te/article/viewForthcomingFile/5845/40685/1 Working paper version. Paper will be copyedited and typeset before publication. (application/pdf)

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Working Paper: Empirical Welfare Economics (2024)
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