Sufficient Statistics Revisited

Research output: Contribution to journalReview articlepeer-review

16 Scopus citations


This article reviews and generalizes the sufficient statistics approach to policy evaluation. The idea of the approach is that the welfare effect of policy changes can be expressed in terms of estimable reduced-form elasticities, allowing for policy evaluation without estimating the structural primitives of fully specified models. The approach relies on three assumptions: that policy changes are small, that government policy is the only source of market imperfection, and that a set of high-level restrictions on the environment and on preferences can be used to reduce the number of elasticities to be estimated. We generalize the approach in all three dimensions. It is possible to develop transparent sufficient statistics formulas under very general conditions, but the estimation requirements increase greatly. Starting from such general formulas elucidates that feasible empirical implementations are in fact structural approaches.

Original languageEnglish (US)
Pages (from-to)515-538
Number of pages24
JournalAnnual Review of Economics
StatePublished - 2021
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


  • discrete reforms
  • elasticities
  • fiscal externality
  • structural approach
  • sufficient statistics
  • welfare analysis


Dive into the research topics of 'Sufficient Statistics Revisited'. Together they form a unique fingerprint.

Cite this