@article {233426, title = {The Policy Elasticity}, journal = {Tax Policy and the Economy}, volume = {30}, year = {2016}, abstract = { This paper illustrates how one can use causal effects of a policy change to measure its welfare impact without decomposing them into income and substitution effects. Often, a single causal effect suffices: the impact on government revenue. Because these responses vary with the policy in question, I term them policy elasticities, to distinguish them from Hicksian and Marshallian elasticities. The model also formally justifies a simple benefit-cost ratio for non-budget neutral policies. Using existing causal estimates, I apply the framework to five policy changes: top income tax rate, EITC generosity, food stamps, job training, and housing vouchers.\  }, url = {http://www.nber.org/papers/w19177}, author = {Nathaniel Hendren} }