Empirical Welfare Analysis with Hedonic Budget Constraints

Debopam Bhattacharya, Ekaterina Oparina and Qianya Xu

Papers from arXiv.org

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.

Date: 2024-11
New Economics Papers: this item is included in nep-dcm and nep-upt
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http://arxiv.org/pdf/2411.01064 Latest 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)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2411.01064

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