IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/299.html
   My bibliography  Save this paper

Compensated Variation in Random Utility Models

Author

Abstract

In this paper we introduce the notion of random expenditure function and derive the distribution of the expenditure function and corresponding compensated choice probabilities in the general case when the (random) utilities are nonlinear in income. We also derive formulae for expenditure and choice under price (policy) changes conditional on the initial utility level. This is of particular interest for welfare measurement because it enables the researcher to analyze the distribution of Compensating variation.

Suggested Citation

  • John K. Dagsvik, 2001. "Compensated Variation in Random Utility Models," Discussion Papers 299, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:299
    as

    Download full text from publisher

    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp299.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. P O Lindberg & E A Eriksson & L-G Mattsson, 1995. "Invariance of Achieved Utility in Random Utility Models," Environment and Planning A, , vol. 27(1), pages 121-142, January.
    2. Joseph A. Herriges & Catherine L. Kling, 1999. "Nonlinear Income Effects in Random Utility Models," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 62-72, February.
    3. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
    4. repec:bla:scandj:v:97:y:1995:i:4:p:635-59 is not listed on IDEAS
    5. Daniel McFadden, 1996. "Computing Willingness-to-Pay in Random Utility Models," Working Papers _011, University of California at Berkeley, Econometrics Laboratory Software Archive.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anders Karlström & Mårten Palme & Ingemar Svensson, 2011. "Assessing the welfare change from a pension reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(6), pages 634-657, December.
    2. Richard Batley, 2008. "On Ordinal Utility, Cardinal Utility and Random Utility," Theory and Decision, Springer, vol. 64(1), pages 37-63, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francisco Javier Amador & Rosa Marina González & Juan de Dios Ortúzar, 2004. "Preference heterogeneity and willingness to pay for travel time," Documentos de trabajo conjunto ULL-ULPGC 2004-12, Facultad de Ciencias Económicas de la ULPGC.
    2. Harold Alderman & Peter F. Orazem & Elizabeth M. Paterno, 2001. "School Quality, School Cost, and the Public/Private School Choices of Low-Income Households in Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 36(2), pages 304-326.
    3. Daniel J. Phaneuf & Catherine L. Kling & Joseph A. Herriges, 2000. "Estimation and Welfare Calculations in a Generalized Corner Solution Model with an Application to Recreation Demand," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 83-92, February.
    4. A. de Palma & K. Kilani, 2003. "Compensating Variation for Discrete Choice Models," THEMA Working Papers 2003-02, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    5. Sudip Chattopadhyay, 2002. "Divergence in alternative Hicksian welfare measures: the case of revealed preference for public amenities," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(6), pages 641-666.
    6. Barrow, Lisa, 2002. "School choice through relocation: evidence from the Washington, D.C. area," Journal of Public Economics, Elsevier, vol. 86(2), pages 155-189, November.
    7. H. Spencer Banzhaf & V. Kerry Smith, 2007. "Meta-analysis in model implementation: choice sets and the valuation of air quality improvements," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(6), pages 1013-1031.
    8. W. Shaw & Michael Ozog, 1999. "Modeling Overnight Recreation Trip Choice: Application of a Repeated Nested Multinomial Logit Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(4), pages 397-414, June.
    9. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    10. Frey, Rainer & Hussinger, Katrin, 2006. "The role of technology in M&As: a firm-level comparison of cross-border and domestic deals," Discussion Paper Series 1: Economic Studies 2006,45, Deutsche Bundesbank.
    11. Turansick, Christopher, 2022. "Identification in the random utility model," Journal of Economic Theory, Elsevier, vol. 203(C).
    12. Haoge Chang & Yusuke Narita & Kota Saito, 2022. "Approximating Choice Data by Discrete Choice Models," Papers 2205.01882, arXiv.org, revised Dec 2023.
    13. Fenichel, Eli P. & Horan, Richard D. & Bence, James R., 2010. "Indirect management of invasive species through bio-controls: A bioeconomic model of salmon and alewife in Lake Michigan," Resource and Energy Economics, Elsevier, vol. 32(4), pages 500-518, November.
    14. Christopher Ksoll, 2007. "Family Networks and Orphan Caretaking in Tanzania," Economics Series Working Papers 361, University of Oxford, Department of Economics.
    15. Fischer, Benjamin & Jessen, Robin & Steiner, Viktor, 2019. "Work incentives and the cost of redistribution via tax-transfer reforms under constrained labor supply," Discussion Papers 2019/10, Free University Berlin, School of Business & Economics.
    16. Philip A. Haile & Ali Hortaçsu & Grigory Kosenok, 2008. "On the Empirical Content of Quantal Response Equilibrium," American Economic Review, American Economic Association, vol. 98(1), pages 180-200, March.
    17. de Jong, Gerard & Daly, Andrew & Pieters, Marits & van der Hoorn, Toon, 2007. "The logsum as an evaluation measure: Review of the literature and new results," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(9), pages 874-889, November.
    18. Anas, Alex & Chang, Huibin, 2023. "Productivity benefits of urban transportation megaprojects: A general equilibrium analysis of «Grand Paris Express»," Transportation Research Part B: Methodological, Elsevier, vol. 174(C).
    19. Deng, Yongheng & Ross, Stephen L. & Wachter, Susan M., 2003. "Racial differences in homeownership: the effect of residential location," Regional Science and Urban Economics, Elsevier, vol. 33(5), pages 517-556, September.
    20. Gibson, John & Barns, Sandra & Cameron, Michael & Lim, Steven & Scrimgeour, Frank & Tressler, John, 2007. "The Value of Statistical Life and the Economics of Landmine Clearance in Developing Countries," World Development, Elsevier, vol. 35(3), pages 512-531, March.

    More about this item

    Keywords

    Random expenditure function; Compensated choice probabilities; Compensating variation.;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:299. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: L Maasø (email available below). General contact details of provider: https://edirc.repec.org/data/ssbgvno.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.