A crucial finding in the Raskutti and Leckie paper, replicating that of Macskassy, is that humans asked to cluster the same data as a CA program, produce equivalent variation in both the optimal number of clusters and their content [32,55].
Table 3 also shows the impact on welfare measured in terms of the equivalent variation (EV) as a result of carbon tax and BAMs.
To test for the possibility of an overall welfare improvement, we compute the Equivalent Variation (EV) associated with the introduction of this institutional change (in relation to the initial benchmark).
To compute the equivalent variation EV x), we first obtain a pure annuity payment, y i (x), that results in the same total life-cycle utility in the two environments considered: (sum _{a=tau }^{T} u y_{i}(x))=U_{i}(x) quad i={b,ref}).
Assume, first, that (almost) complete redistributive taxes were optimal, so that (varphi ^W = 0.9) (which is actually the case when (D = 0.1)), with an associated welfare gain of 62.45 % in terms of equivalent variation in consumption (see Table 5, column 2).
Changes in consumer welfare, measured as equivalent variation changes in annual income, are often used as an indicator to measure the economic effects of a policy.
Computable general equilibrium modelling also produces the welfare measure of equivalent variation, which represents the amount of money that, if an economic change does not happen, leaves the population just as well off as if the change had occurred.
Economists commonly use two measures to assign monetary value to some good or service: the "compensating variation" and the "equivalent variation".
The compensating variation asks how much money we would have to give a person to make up for taking the good away from them while the equivalent variation asks how much money someone would give up to acquire the good in question.
Net pension savings and welfare changes (Equivalent Variation for workers starting their unemployment scheme, EV1) from the pension reform.
