The expected consumer's surplus as a welfare measure

• 成果类型: Article
• 署名作者: Stennek, J
• 署名单位: Research Institute of Industrial Economics (IFN)
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(99)00007-9
• 发表日期: 1999
• 页码: 265-288
• 关键词: consumer's surplus; ex ante compensating variation; price variability; risk aversion

摘要

The expected consumer's surplus (ECS) is often used as a monetary measure of consumer welfare. Examples include the theory of regulation, competition policy, and price stabilization. This paper shows that, in general, the ECS does not convey any information about the consumer's ranking of price distributions, if these differ in risk. Moreover, the ECS provides rigorous monetary assessments of consumer welfare if, and only if, the consumer is risk-neutral, and has zero income-elasticity of demand. Since empirical estimates suggest that these conditions are violated, the paper serves as a warning to the continued use of the ECS. (C) 1999 Elsevier Science S.A. All rights reserved.