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Highlights of Chapter 13

Highlights of Chapter 13. Estimating social surplus from demand. The linear demand relation provides the measures elasticity from the coefficients q = a 0 + a 1 P Surplus change arising from a slope estimate or elasticity estimate may emerge from a regression of prices and quantities.

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Highlights of Chapter 13

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  1. Highlights of Chapter 13

  2. Estimating social surplus from demand • The linear demand relation provides the measures elasticity from the coefficients • q = a0 + a1P • Surplus change arising from a slope estimate or elasticity estimate may emerge from a regression of prices and quantities. • The typical approach to estimate demand is the system • qd = a0 + a1P+a2Y • qs = b0 + b1P+b2i • qd=qs • The elasticity varies along the demand “curve”

  3. Many functional forms exist for demand relations. The constant elasticity form yield then same value anywhere along the relationship. Q = B0pB1 Lnq = lnB0 + B1lnp

  4. Extrapolating can lead to error

  5. THESE ARE THE RESULTS OF THE TAKING CHARGE EVALUATION. The dependent variable is the difference in social assistance received before and after for the comparison group relative to the control group. There is a single “comparison” group (amalgam of for three programs) and main program group (Taking Charge). The control group is social assistance clients that never took training. See: http://www.hrsdc.gc.ca/eng/cs/sp/hrsdc/edd/reports/1999-000448/sp-ah109-e.pdf Interpreting Regression Results – net impact estimation See notes page

  6. The three hypothetical cases show how client attributes and intervention interact to produce different expected changes in income assistance after the intervention. Table 37 shows a net decrease in assistance payments for Case 1 ($280), a decrease of $73 for Case 2 and a reduction of $79 per month for Case 3.

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