TY  - BOOK
AU  - Araar,Abdelkrim
AU  - Araar,Abdelkrim
AU  - Verme,Paolo
TI  - Prices and Welfare
PY  - 2016///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Access to Markets
KW  - Agriculture
KW  - Choice
KW  - Consumer Demand
KW  - Consumer Preferences
KW  - Consumer Surplus
KW  - Consumers
KW  - Consumption
KW  - Cost of Living
KW  - Data
KW  - Demand
KW  - Demand Curves
KW  - Demand Function
KW  - Developing Countries
KW  - Distribution
KW  - E-Business
KW  - Econometrics
KW  - Economic Research
KW  - Economic Theory & Research
KW  - Economics Literature
KW  - Elasticity
KW  - Electricity
KW  - Emerging Markets
KW  - Engel Curve
KW  - Equity
KW  - Exchange
KW  - Expenditure
KW  - Food Price
KW  - Free Market
KW  - Government Revenues
KW  - Income
KW  - Income Effects
KW  - Index Numbers
KW  - Information
KW  - Interest
KW  - International Economics & Trade
KW  - Lorenz Curve
KW  - Macroeconomics and Economic Growth
KW  - Market Prices
KW  - Markets & Market Access
KW  - Money
KW  - Nominal Income
KW  - Normal Good
KW  - Open Access
KW  - Outputs
KW  - Particular Country
KW  - PC
KW  - Price
KW  - Price Adjustments
KW  - Price Change
KW  - Price Decreases
KW  - Price Elasticity
KW  - Price Increases
KW  - Price Schedule
KW  - Price Structure
KW  - Price Variation
KW  - Price_Index
KW  - Pricing
KW  - Private Sector Development
KW  - Product
KW  - Productivity
KW  - Real Income
KW  - Reliability
KW  - Results
KW  - Sales
KW  - Savings
KW  - Subsidies
KW  - Substitute
KW  - Substitute Goods
KW  - Substitution
KW  - Surplus
KW  - Tax
KW  - Tax Systems
KW  - Transactions
KW  - Utility
KW  - Utility Function
KW  - Utility Maximization
KW  - Value
KW  - Variables
KW  - Wages
KW  - Web
KW  - Welfare
KW  - Welfare Economics
N2  - What is the welfare effect of a price change? This simple question is one of the most relevant and controversial questions in microeconomic theory and its different answers can lead to severe heterogeneity in empirical results. This paper returns to this question with the objective of providing a general framework for the use of theoretical contributions in empirical works, with a particular focus on poor people and poor countries. Welfare measures (such as Equivalent Variation or Consumer's Surplus) and computational methods (such as Taylor's approximations or the Vartia method) are compared to test how these choices result in different welfare measurement under different price shock scenarios. As a rule of thumb and irrespective of parameter choices, welfare measures converge to approximately the same result for price changes below 10 percent. Above this threshold, these measures start to diverge significantly. Budget shares play an important role in explaining such divergence, whereas the choice of demand system has a minor role. Under standard utility assumptions, the Laspeyers and Paasche variations are always the outer bounds of welfare estimates and consumer surplus is always the median estimate. The paper also introduces a new simple welfare approximation, clarifies the relation between Taylor's approximations and the income and substitution effects, and provides an example for treating nonlinear pricing. Stata codes for all computations are provided in annex
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-7566
ER  -