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Homothetic utility, Roy’s Lemma and consumer’s surplus

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  • ten Raa, Thijs

Abstract

I provide a short proof that consumer’s surplus normalized by income is the correct welfare measure when utility is homothetic.

Suggested Citation

  • ten Raa, Thijs, 2017. "Homothetic utility, Roy’s Lemma and consumer’s surplus," Economics Letters, Elsevier, vol. 161(C), pages 133-134.
    • Handle: RePEc:eee:ecolet:v:161:y:2017:i:c:p:133-134
    DOI: 10.1016/j.econlet.2017.10.010
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    References listed on IDEAS

    as
    1. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
    2. Takayama, Akira, 1982. "On consumer's surplus," Economics Letters, Elsevier, vol. 10(1-2), pages 35-42.
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    Cited by:

    1. Guerra, Ana-Isabel & Manresa, Antonio & Sancho, Ferran, 2018. "The true index of cost of living under general equilibrium: The numéraire matters," Economics Letters, Elsevier, vol. 173(C), pages 69-72.

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    More about this item

    Keywords

    Consumer’s surplus; Compensating variation; Equivalent variation;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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