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Published August 31, 2017 | Submitted
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Welfare Economics for Tobit Models

Abstract

In this paper we demonstrate the correct calculation of consumer surplus in censored and truncated regression models, focusing on Tobit models. We review a variety of examples from the literature and isolate the nature of the bias associated with the incorrect calculation of consumer surplus in several of them.

Additional Information

The authors gratefully acknowledge research support from the Environmental Quality Laboratory at the California Institute of Technology and from Putnam, Hayes, and Bartlett, Inc. Helpful comments made by Charlie Cicchetti and David Grether on an earlier draft are gratefully acknowledged.

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August 19, 2023
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