Empirical Welfare Economics
Abstract
Welfare economics relies on access to agents' utility functions: we revisit classical questions in welfare economics, assuming access to data on agents' past choices instead of their utilities. Our main result considers the existence of utilities that render a given allocation Pareto optimal. We show that a candidate allocation is efficient for some utilities consistent with the choice data if and only if it is efficient for an incomplete relation derived from the revealed preference relations and convexity. Similar ideas are used to make counterfactual choices for a single consumer, policy comparisons by the Kaldor criterion, and determining which allocations, and which prices, may be part of a Walrasian equilibrium.
Additional Information
This paper is dedicated to the memory of Kim Border. We are grateful to audiences at the CUHK-HKU-HKUST Joint Theory Seminar, McGill University, Stanford University, the Workshop on Applications of Revealed Preferences, and Roy Allen for detailed comments.Attached Files
Submitted - 2108.03277.pdf
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Additional details
- Eprint ID
- 115368
- Resolver ID
- CaltechAUTHORS:20220707-170540821
- Created
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2022-07-07Created from EPrint's datestamp field
- Updated
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2023-06-02Created from EPrint's last_modified field