Following Small & Rosen (1981), this paper considers a model of discrete-continuous demand whereby an individual is offered a discrete choice between goods 1 and 2; conditional upon that choice, he/she consumes a positive continuous quantities of the chosen good and a third (numeraire) good. The contribution of the present paper is to review the theoretical basis of Small & Rosen, with a view to strengthening practical advice. The key outcome of Small & Rosen is a measure of welfare specific to the discrete choice. We clarify that this welfare measure arises from four assumptions on the specification of deterministic utility within the discrete choice model: (I) for each alternative, equivalence (in absolute terms) between the conditional marginal utilities of income and price; (II) common conditional marginal utility of income across alternatives; (III) common conditional marginal utility of price across alternatives; (IV) independence of the conditional marginal utility of income from prices; together with a fifth assumption concerning the continuous demand: (V) null demand for the numeraire good. We show that a discrete choice model specified in this manner yields a probabilistic demand function that observes the fundamental properties of adding-up, negativity, homogeneity and symmetry, and embodies a null income effect. We conclude that Small & Rosen’s welfare measure is valid only if the discrete choice model complies with the five specification requirements, and the omission of income effects is justifiable in the context of application.