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Welfare Analysis of Changing Notches: Evidence from Bolsa Família

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  • Katy Bergstrom
  • William Dodds
  • Juan Rios

Abstract

We develop a framework to bound the welfare impacts of arbitrarily large reforms to notches using two sufficient statistics: the change in the number of households located below the new notch and the change in the number of households located below the old notch. Our bounds hold in a wide class of models, highlighting a new way to use reduced-form bunching evidence for welfare analysis without making strong assumptions on the economic environment. We estimate these two statistics using a difference-in-difference strategy for a reform to the antipoverty program Bolsa Família, finding that the reform's MVPF is between 0.90–1.12.

Suggested Citation

  • Katy Bergstrom & William Dodds & Juan Rios, 2025. "Welfare Analysis of Changing Notches: Evidence from Bolsa Família," American Economic Journal: Economic Policy, American Economic Association, vol. 17(2), pages 122-161, May.
    • Handle: RePEc:aea:aejpol:v:17:y:2025:i:2:p:122-61
    DOI: 10.1257/pol.20230024
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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