This article presents arguments by Willig (1976) and Hausman (1981) who compared Marshall’s and Hicks’s methods for measuring welfare changes due to price shifts. While both considered Hicks’s method to be superior, Willig argued that the two approaches result in very similar estimates of consumer surplus for goods that both i) account for a small share of total expenditure, and ii) have a small income elasticity of demand. Hausman challenged Willig’s conclusion by showing

Passey et al. (2017) used actual energy consumption data of Sydney households to analyse the extent to which different electricity network demand tariffs charge customers according to the cost of their consumption. Among other things, they illustrate that a demand tariff that charges households’ individual monthly peak demand is less likely to be cost-reflective than one applied during the monthly network peak period.  Picture by Nastya Dulhiier, Unsplash Electricity network

There is a spectre haunting our lives, and that is chaos theory. It’s all around us, but we hardly see it. Understanding it gets to the...

Knotek (2007) examined whether the statistical relationship of real output growth with the unemployment rate, as captured by Arthur...

Alfred Marshall’s derivation of ‘consumer surplus’ in his book ‘Principles of Economics’, was one of the first attempts by economists to...