Abstract: A basic problem with policy evaluations and social welfare functions based on individual utility functions is that these functions are unobservable. There is no direct way we can observe how much a household gains from, for example, a fall in a commodity price. We need indirect measures that correctly reflect changes in welfare. One way to obtain such measures is by collecting information on consumers' actual behaviour in markets for goods and services. In this chapter, we will review the literature on the measurement of welfare (change). The chapter also includes a presentation of how information about a firm's supply and demand curves can be used to calculate changes in profits or producer surplus.
Publication Year: 1991
Publication Date: 1991-08-22
Language: en
Type: book-chapter
Indexed In: ['crossref']
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Cited By Count: 5
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