Expected consumer's surplus as an approximate welfare measure

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


Except for a knife-edge case of preferences, the percentage error from using the change in expected consumer's surplus (ECS) to approximate the willingness to pay for a change in the distribution of a random price is unbounded, in contrast to Willig's (Am Econ Rev 66:589-597; 1976) famous approximation result for nonrandom prices. If the change is smooth on the space of random variables, and either the initial price is nonrandom or state-contingent payments are possible, then the change in ECS locally approximates the willingness to pay well. Unfortunately, this smoothness fails in some important applications.

Original languageEnglish (US)
Pages (from-to)127-155
Number of pages29
JournalEconomic Theory
Issue number1
StatePublished - Jan 2008


  • Expected consumer's surplus
  • Local cost-benefit analysis
  • Uncertainty
  • Welfare

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'Expected consumer's surplus as an approximate welfare measure'. Together they form a unique fingerprint.

Cite this