Nonparametric Welfare Analysis

Jerry A. Hausman, Whitney K. Newey
2017 Annual Review of Economics  
Exact consumers 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 heteroeneity given the high degree of unexplained demand variation often found in applications. This paper surveys work on nonparametric welfare analysis, focusing on that
more » ... hich allows for general heterogeneity in demand as in Hausman and Newey (2015). JEL Classification: C10, C14, C51, C54.
doi:10.1146/annurev-economics-080315-015107 fatcat:zmr3o2lhejhm5bnkhtjzrow7ou