A contingent behavior approach for estimating price elasticities

Abstract ​Analysis of many policy interventions depends on the availability of accurate estimates of price, income and other elasticities. Economists typically use revealed preference data to estimate these elasticities ex-post. We propose a simple survey-based contingent behavior approach for estimating ex-ante (expected) elasticities as well as their distributions in the population. Ex-ante and ex-post estimates of eleasticities may differ for legitimate reasons; both are relevant to policymakers. We illustrate this CB approach using data from seven Global South countries. Results show that it is possible to develop contemporaneous country-specific estimates of ex-ante elasticities quickly and inexpensively in data-poor environments. We also discuss how these ex-ante elasticities may inform policy acceptance.