IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v115y2025i8p2449-87.html
   My bibliography  Save this article

Robustness Measures for Welfare Analysis

Author

Listed:
  • Zi Yang Kang
  • Shoshana Vasserman

Abstract

Economists routinely make functional form assumptions on demand curves to derive welfare conclusions. How sensitive are these conclusions to such assumptions? In this paper, we develop robustness measures that quantify the extent to which the true demand curve must deviate from common functional form assumptions in order to overturn a welfare conclusion. We parametrize this variability in terms of the gradient and curvature of the demand curve. By leveraging tools from information design, we show that our measures are easy to compute. Our measures are also flexible and easy to use, as we illustrate through empirical applications.

Suggested Citation

  • Zi Yang Kang & Shoshana Vasserman, 2025. "Robustness Measures for Welfare Analysis," American Economic Review, American Economic Association, vol. 115(8), pages 2449-2487, August.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:8:p:2449-87
    DOI: 10.1257/aer.20220673
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20220673
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://www.aeaweb.org/articles/materials/23598
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/23599
    Download Restriction: no
    File URL: https://libkey.io/10.1257/aer.20220673?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D60 - Microeconomics - - Welfare Economics - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    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:aea:aecrev:v:115:y:2025:i:8:p:2449-87. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.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.