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Incorporating Social Welfare in Program-Evaluation and Treatment Choice

Author

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  • Debopam Bhattacharya

    (University of Cambridge)

  • Tatiana Komarova

    (University of Manchester)

Abstract

We introduce a notion of money-metric social welfare for discrete choice under unrestricted heterogeneity and income effects. It is the maximized indirect utility under normalization of the outside option. It also equals the amount of income necessary to achieve a given level of utility, while certain choices are prohibited. We show that the distribution of this quantity is nonparametrically identified as a closed-form functional of average structural demand for the outside option, making it useful for cost-benefit analysis and optimal targeting. An illustration with private tuition subsidies in India shows that the income path of usage-maximizing subsidies differs significantly from welfare-maximizing ones.

Suggested Citation

  • Debopam Bhattacharya & Tatiana Komarova, 2026. "Incorporating Social Welfare in Program-Evaluation and Treatment Choice," The Review of Economics and Statistics, MIT Press, vol. 108(2), pages 311-326, March.
    • Handle: RePEc:tpr:restat:v:108:y:2026:i:2:p:311-326
    DOI: 10.1162/rest_a_01424
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    Cited by:

    1. is not listed on IDEAS
    2. Maitra, Pushkar & Mitra, Sandip & Mookherjee, Dilip & Visaria, Sujata, 2022. "Evaluating the distributive effects of a micro-credit intervention," Journal of Development Economics, Elsevier, vol. 158(C).
    3. Ganesh Karapakula, 2022. "An Axiomatic Framework for Cost-Benefit Analysis," Papers 2207.13033, arXiv.org.

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