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This paper develops nonparametric methods for welfare‐analysis of economic changes in the common setting of multinomial choice. The results cover (a) simultaneous price‐change of multiple alternatives, (b) introduction/elimination of an option, (c) changes in choice‐characteristics, and (d) choice among nonexclusive alternatives. In these cases, Marshallian consumer surplus becomes path‐dependent, but Hicksian welfare remains well‐defined. We demonstrate that under completely unrestricted preference‐heterogeneity and income‐effects, the distributions of Hicksian welfare are point‐identified from structural choice‐probabilities in scenarios (a), (b), and only set‐identified in (c), (d). In program‐evaluation contexts, our results enable the calculation of compensated‐effects, that is, the program's cash‐equivalent and resulting deadweight‐loss. They also facilitate a theoretically justified cost‐benefit comparison of interventions targeting different outcomes, for example, a tuition‐subsidy and a health‐product subsidy. Welfare analyses under endogeneity is briefly discussed. An application to data on choice of fishing‐mode illustrates the methods. [ABSTRACT FROM AUTHOR]

Random utility models are widely used to study consumer choice. The vast majority of applications assume utility is linear in consumption of the outside good, which imposes that total expenditure on the subset of goods of interest does not affect demand for inside goods and restricts demand curvature and pass‐through. We show that relaxing these restrictions can be important, particularly if one is interested in the distributional effects of a policy change, even in a market for a small budget share product category. We consider the use of tax policy to lower fat consumption and show that a specific (per unit) tax results in larger reductions than an ad valorem tax, but at a greater cost to consumers. [ABSTRACT FROM AUTHOR]