Calculating Marginal and Non-marginal Welfare Measures

This chapter focuses on the calculation of marginal and non-marginal welfare measures. It outlines how the calculation of welfare measures is related to the specified model and the assumptions underlying that model. It further describes how the calculation of these measures is affected by the inclusion of preference heterogeneity, including the incorporation of interaction terms to capture observed preference heterogeneity or random parameters to capture unobserved preference heterogeneity. Finally, it discusses how these measures can be aggregated and compared.