NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Applied Welfare Economics with Discrete Choice Models

Harvey S. Rosen, Kenneth A. Small

NBER Working Paper No. 319 (Also Reprint No. r0165)
Issued in February 1979
NBER Program(s):   PE

Economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices. Such models are potentially very important in evaluating the impact of government programs upon consumer welfare. But very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations. This paper shows how the conventional methods of applied welfare economics can be modified to handle such cases. It focuses on the computation of the excess burden of taxation, and the evaluation of quality change. The results are applied to stochastic utility models, including the popular cases of probit and logit analysis. Throughout, the emphasis is on providing rigorous guidelines for carrying out applied work.

download in pdf format
   (564 K)

email paper

This paper is available as PDF (564 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0319

Published: Small, Kenneth A. and Rosen, Harvey A. "Applied Welfare Economics with Discrete Choice Models." Econometrica, Vol. 49, No. 1, (January 1981), pp. 105- 130. citation courtesy of

Users who downloaded this paper also downloaded these:
Arrow Economic Welfare and the Allocation of Resources for Invention
Nevo w8425 New Products, Quality Changes and Welfare Measures Computed From Estimated Demand Systems
Stiglitz w3641 The Invisible Hand and Modern Welfare Economics
Arcidiacono, Bayer, Blevins, and Ellickson w18449 Estimation of Dynamic Discrete Choice Models in Continuous Time with an Application to Retail Competition
Bernheim and Rangel w11518 Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us