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| Main Authors: | , , |
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| Format: | Preprint |
| Published: |
2024
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2411.01064 |
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| _version_ | 1866929574167707648 |
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| author | Bhattacharya, Debopam Oparina, Ekaterina Xu, Qianya |
| author_facet | Bhattacharya, Debopam Oparina, Ekaterina Xu, Qianya |
| contents | We analyze demand settings where heterogeneous consumers maximize utility for product attributes subject to a nonlinear budget constraint. We develop nonparametric methods for welfare-analysis of interventions that change the constraint. Two new findings are Roy's identity for smooth, nonlinear budgets, which yields a Partial Differential Equation system, and a Slutsky-like symmetry condition for demand. Under scalar unobserved heterogeneity and single-crossing preferences, the coefficient functions in the PDEs are nonparametrically identified, and under symmetry, lead to path-independent, money-metric welfare. We illustrate our methods with welfare evaluation of a hypothetical change in relationship between property rent and neighborhood school-quality using British microdata. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2411_01064 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Empirical Welfare Analysis with Hedonic Budget Constraints Bhattacharya, Debopam Oparina, Ekaterina Xu, Qianya Econometrics We analyze demand settings where heterogeneous consumers maximize utility for product attributes subject to a nonlinear budget constraint. We develop nonparametric methods for welfare-analysis of interventions that change the constraint. Two new findings are Roy's identity for smooth, nonlinear budgets, which yields a Partial Differential Equation system, and a Slutsky-like symmetry condition for demand. Under scalar unobserved heterogeneity and single-crossing preferences, the coefficient functions in the PDEs are nonparametrically identified, and under symmetry, lead to path-independent, money-metric welfare. We illustrate our methods with welfare evaluation of a hypothetical change in relationship between property rent and neighborhood school-quality using British microdata. |
| title | Empirical Welfare Analysis with Hedonic Budget Constraints |
| topic | Econometrics |
| url | https://arxiv.org/abs/2411.01064 |