Nonparametric Welfare Analysis for Discrete Choice: Levels and Differences of Individual and Social Welfare

Arbeitspapier

Empirical welfare analyses often impose stringent parametric assumptions on individuals’ preferences and neglect unobserved preference heterogeneity. In this paper, we develop a framework to conduct individual and social welfare analysis for discrete choice that does not suffer from these drawbacks. We first adapt the broad class of individual welfare measures introduced by Fleurbaey (2009) to settings where individual choice is discrete. Allowing for unrestricted, unobserved preference heterogeneity, these measures become random variables. We then show that the distribution of these objects can be derived from choice probabilities, which can be estimated nonparametrically from cross-sectional data. In addition, we derive nonparametric results for the joint distribution of welfare and welfare differences, as well as for social welfare. The former is an important tool in determining whether those who benefit from a price change belong disproportionately to those who were initially well-off. An empirical application illustrates the methods.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 9071

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Semiparametric and Nonparametric Methods: General ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions ; Consumer Economics: Empirical Analysis ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Taxation and Subsidies: Incidence ; General Welfare; Well-Being
• Thema: discrete choice ; nonparametric welfare analysis ; individual welfare ; social welfare ; money metric utility ; compensating variation ; equivalent variation

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Capéau, Bart ; De Sadeleer, Liebrecht ; Maes, Sebastiaan ; Decoster, André
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and Ifo Institute (CESifo)
• (wo): Munich
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/235441
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ