Welfare analysis meets causal inference
We describe a frame work for empirical welfare analysis that uses the causal estimates of a policy’s impact on net government spending. This framework provides guidance for which causal effects are (and are not) needed for empirical welfare analysis of public policies. The key ingredient is the cons...
| Main Authors: | , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
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American Economic Association
2021
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| Online Access: | https://hdl.handle.net/1721.1/130347 |
| _version_ | 1826196700921856000 |
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| author | Finkelstei, Amy Hendren, Nathaniel |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Finkelstei, Amy Hendren, Nathaniel |
| author_sort | Finkelstei, Amy |
| collection | MIT |
| description | We describe a frame work for empirical welfare analysis that uses the causal estimates of a policy’s impact on net government spending. This framework provides guidance for which causal effects are (and are not) needed for empirical welfare analysis of public policies. The key ingredient is the construction of each policy’s marginal value of public funds (MVPF). The MVPF is the ratio of beneficiaries’ willingness to pay for the policy to the net cost to the government. We discuss how the MVPF relates to “traditional” welfare analysis tools such as the marginal excess burden and marginal cost of public funds. We show how the MVPF can be used in practice by applying it to several canonical empirical applications from public finance, labor, development, trade, and industrial organization. |
| first_indexed | 2024-09-23T10:35:29Z |
| format | Article |
| id | mit-1721.1/130347 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T10:35:29Z |
| publishDate | 2021 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | mit-1721.1/1303472022-09-30T21:45:26Z Welfare analysis meets causal inference Finkelstei, Amy Hendren, Nathaniel Massachusetts Institute of Technology. Department of Economics We describe a frame work for empirical welfare analysis that uses the causal estimates of a policy’s impact on net government spending. This framework provides guidance for which causal effects are (and are not) needed for empirical welfare analysis of public policies. The key ingredient is the construction of each policy’s marginal value of public funds (MVPF). The MVPF is the ratio of beneficiaries’ willingness to pay for the policy to the net cost to the government. We discuss how the MVPF relates to “traditional” welfare analysis tools such as the marginal excess burden and marginal cost of public funds. We show how the MVPF can be used in practice by applying it to several canonical empirical applications from public finance, labor, development, trade, and industrial organization. 2021-04-02T13:18:06Z 2021-04-02T13:18:06Z 2020-09 2021-04-01T17:23:40Z Article http://purl.org/eprint/type/JournalArticle 0895-3309 https://hdl.handle.net/1721.1/130347 Finkelstein, Amy and Nathaniel Hendren. “Welfare analysis meets causal inference.” Journal of Economic Perspectives, 34, 4 (September 2020): 146–167 © 2020 The Author(s) en 10.1257/JEP.34.4.146 Journal of Economic Perspectives Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf American Economic Association American Economic Association |
| spellingShingle | Finkelstei, Amy Hendren, Nathaniel Welfare analysis meets causal inference |
| title | Welfare analysis meets causal inference |
| title_full | Welfare analysis meets causal inference |
| title_fullStr | Welfare analysis meets causal inference |
| title_full_unstemmed | Welfare analysis meets causal inference |
| title_short | Welfare analysis meets causal inference |
| title_sort | welfare analysis meets causal inference |
| url | https://hdl.handle.net/1721.1/130347 |
| work_keys_str_mv | AT finkelsteiamy welfareanalysismeetscausalinference AT hendrennathaniel welfareanalysismeetscausalinference |