# How can welfare losses after shocks be compared

**URL:** <https://forum.dynare.org/t/how-can-welfare-losses-after-shocks-be-compared/22803>\
**Category:** Optimal Policy\
**Created:** [26 July 2023 01:29 UTC](https://forum.dynare.org/t/how-can-welfare-losses-after-shocks-be-compared/22803 "2023-07-26T01:29:03Z")\
**Posts on this page:** 1\
**Showing post:** 3

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [30 July 2023 12:02 UTC](https://forum.dynare.org/t/how-can-welfare-losses-after-shocks-be-compared/22803/3 "2023-07-30T12:02:20Z")

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What do you mean with

> [@wangshiye](#):
>
> I learned that welfare calculates the steady-state value.

? People typically compare conditional welfare at the steady state or unconditional welfare (search the forum, e.g. [Welfare cost of business cycles - #10 by jpfeifer](https://forum.dynare.org/t/welfare-cost-of-business-cycles/3802/10)). Both will take the stochastic properties of the model into account. The resulting number (Welfare1 in your notation) is then transformed relative to a steady state object (welfare 0) that features no shocks at all. But that latter regime is just a comparison object.

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