Unit 4 · Lesson 1
Consumer Surplus

When you purchase something and you pay less than you expected, you feel great! Economists want to capture that feeling, and that’s what consumer surplus does! How do economists use consumer surplus? Well, when economists compare costs and benefits of say an environmental policy, loss of consumer surplus is an important component to that calculation. In this lesson, Professor John List reflects on a time he considered consumer surplus during his time as an economic advisor in the White House.