Nonparametric Bounds on Welfare Measures: A New Tool for Nonmarket Valuation
John Crooker, Catherine L. Kling
November 1998 [99-WP 208]
Crooker, J. and C.L. Kling. 1998. "Nonparametric Bounds on Welfare Measures: A New Tool for Nonmarket Valuation." Working paper 99-WP 208. Center for Agricultural and Rural Development, Iowa State University.
Given the empirically observed sensitivity of welfare estimates to functional form, it is natural to consider whether nonparametric methods such as those developed by Varian might be of value in nonmarket welfare analysis. This study presents simple methods for constructing nonparametric bounds on compensating or equivalent variation for price changes based on nonparametric methods.