© 2019

Prices and Welfare

An Introduction to the Measurement of Well-being when Prices Change


Table of contents

  1. Front Matter
    Pages i-xvii
  2. Abdelkrim Araar, Paolo Verme
    Pages 1-7
  3. Abdelkrim Araar, Paolo Verme
    Pages 9-17
  4. Abdelkrim Araar, Paolo Verme
    Pages 19-46
  5. Abdelkrim Araar, Paolo Verme
    Pages 47-74
  6. Abdelkrim Araar, Paolo Verme
    Pages 75-78
  7. Back Matter
    Pages 79-98

About this book


This book provides a general framework for the use of theoretical contributions in empirical works, addressing the question of what is the the effect of a price change on household well-being. This simple question is one of the most relevant and controversial questions in microeconomic theory and one of the main sources of errors in empirical economics. In particular, this book aims to 1) Review the essential microeconomics literature since the first seminal papers by Hicks in the 1930s; 2) Organize and simplify this literature in a way that can be easily used by analysts with different backgrounds providing algebraic, geometric and computational illustrations; 3) identify and measure the essential differences across methods and test how these differences affect empirical results; 4) Provide guidelines for the use of alternative approaches under imperfect information on utility, demand systems, elasticities and more generally incomes and quantities; 5) Provide computational codes in Stata for the application of all methods. The focus of the book is on developing economies and the poor, and the assumptions made will relate primarily to these countries and group of people, presumably the main policy focus of international organizations and national governments.


Welfare effect Hicks computational economics modelling price change development economics stata utility demand systems elasticities computational codes welfare measurements consumer surplus compensating variation

Authors and affiliations

  1. 1.Pavillon J. A. De Sève, Office 2190Laval UniversityQuebecCanada
  2. 2.The World BankWashington DCUSA

About the authors

Abdelkrim Araar is Researcher at Laval University, Quebec City, Canada.

Paolo Verme is Lead Economist at the World Bank, Washington D.C., USA

Bibliographic information

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