joint with the Département de sciences économiques, Université de Montréal
Organizer : Karim Chalak (U. de Montréal)
* Invitation only. Please contact the organizer if you would like access.
RÉSUMÉ: The econometric literature on program-evaluation and optimal treatment-choice takes functionals of outcome-distributions as `social-welfare’ and ignores program impacts on unobserved utilities, whereas the utility-based welfare analysis tradition in public finance ignores unobserved heterogeneity in individual preferences. This paper reconciles the econometric and public-finance approaches to welfare analysis in the practically important setting of discrete-choice. We show that under unrestricted preference heterogeneity and income-effects, the distribution of individual indirect utility is nonparametrically identified from average demand. This enables cost-benefit analysis of non-marginal policy-interventions and their optimal targeting based on planners’ re-distributional preferences. Our methods are illustrated via empirical analyses of an experimental and an observational dataset.