Exact Consumer's Surplus and Deadweight Loss

Consumer's surplus is a widely used tool in applied welfare economics. Both economic theorists and cost benefit analysis often use consumer's surplus despite its somewhat dubious reputation. The basic idea is to evaluate the value to a consumer or his willingness to for a change in price of a good from say pricep? to pricep'. Because price changes affect consumer welfare, an evaluation of this effect is often a key input to public policy decisions. Yet consumer's surplus is probably the most controversial of widely used economic concepts. Both Paul Samuelson and Ian Little conclude that the economics profession would be better off without it. It is my feeling of the situation that substantial agreement exists…