Price Elasticity of Demand Score
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A Price Elasticity of Demand Score is a price elasticity score for a price elasticity of demand measure.
- AKA: Elasticity of Demand Value.
- Context:
- It can range from being an Elastic Demand Score (such as necessities) to being an Inelastic Demand Score (such as luxuries).
- It can range from being a Negative Demand Elasticity to being a Positive Demand Elasticity.
- Example(s):
- -0.7 (for Beer) in ~1990 in the U.S.
- −1.0 (for Wine) in ~1990 in the U.S.
- −1.5 (for Spirits) in ~1990 in the U.S.
- …
- Counter-Example(s):
- …
- See: Price Inelastic, Price Elastic.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/Price_elasticity_of_demand#Selected_price_elasticities Retrieved:2015-4-27.
- Various research methods are used to calculate price elasticities in real life, including analysis of historic sales data, both public and private, and use of present-day surveys of customers' preferences to build up test markets capable of modelling such changes. Alternatively, conjoint analysis (a ranking of users' preferences which can then be statistically analysed) may be used. [1] Though PEDs for most demand schedules vary depending on price, they can be modeled assuming constant elasticity. Using this method, the PEDs for various goods — intended to act as examples of the theory described above — are as follows. For suggestions on why these goods and services may have the PED shown, see the above section on determinants of price elasticity. * Cigarettes (US)[2] ** −0.3 to −0.6 (General) ** −0.6 to −0.7 (Youth)
- Alcoholic beverages (US) [3] **−0.3 or −0.7 to −0.9 as of 1972 (Beer) **−1.0 (Wine)
- −1.5 (Spirits)
- Airline travel (US)[4]
- −0.3 (First Class)
- −0.9 (Discount)
- −1.5 (for Pleasure Travelers)
- Livestock
- −0.5 to −0.6 (Broiler Chickens) [5] * Oil (World) **−0.4 * Car fuel **−0.09 (Short run)
- −0.31 (Long run)
- Medicine (US)
- Cinema visits (US)
- −0.87 (General)
- Live Performing Arts (Theater, etc.)
- Alcoholic beverages (US) [3] **−0.3 or −0.7 to −0.9 as of 1972 (Beer) **−1.0 (Wine)
- Various research methods are used to calculate price elasticities in real life, including analysis of historic sales data, both public and private, and use of present-day surveys of customers' preferences to build up test markets capable of modelling such changes. Alternatively, conjoint analysis (a ranking of users' preferences which can then be statistically analysed) may be used. [1] Though PEDs for most demand schedules vary depending on price, they can be modeled assuming constant elasticity. Using this method, the PEDs for various goods — intended to act as examples of the theory described above — are as follows. For suggestions on why these goods and services may have the PED shown, see the above section on determinants of price elasticity. * Cigarettes (US)[2] ** −0.3 to −0.6 (General) ** −0.6 to −0.7 (Youth)
- ↑ Png, Ivan (1999). pp.79-80.
- ↑ Perloff, J. (2008). p.97.
- ↑ Chaloupka, Frank J.; Grossman, Michael; Saffer, Henry (2002); Hogarty and Elzinga (1972) cited by Douglas Greer in Duetsch (1993).
- ↑ Pindyck; Rubinfeld (2001). p.381.; Steven Morrison in Duetsch (1993), p. 231.
- ↑ Richard T. Rogers in Duetsch (1993), p.6.
- ↑ Samuelson; Nordhaus (2001).
- ↑ Goldman and Grossman (1978) cited in Feldstein (1999), p.99
- ↑ de Rassenfosse and van Pottelsberghe (2007, p.598; 2012, p.72)
- ↑ Perloff, J. (2008).
- ↑ Heilbrun and Gray (1993, p.94) cited in Vogel (2001)
- ↑ Goodwin; Nelson; Ackerman; Weissskopf (2009). p.124.
- ↑ Brownell, Kelly D.; Farley, Thomas; Willett, Walter C. et al. (2009).
- ↑ Ayers; Collinge (2003). p.120.
- ↑ Barnett and Crandall in Duetsch (1993), p.147
- ↑ Krugman and Wells (2009) p.147.
2010
- (Andreyeva et al., 2010) ⇒ Tatiana Andreyeva, Michael W. Long, and Kelly D. Brownell. (2010). “The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food.” In: American Journal of Public Health, 100(2).
- ABSTRACT: In light of proposals to improve diets by shifting food prices, it is important to understand how price changes affect demand for various foods.
We reviewed 160 studies on the price elasticity of demand for major food categories to assess mean elasticities by food category and variations in estimates by study design. Price elasticities for foods and nonalcoholic beverages ranged from 0.27 to 0.81 (absolute values), with food away from home, soft drinks, juice, and meats being most responsive to price changes (0.7–0.8). As an example, a 10% increase in soft drink prices should reduce consumption by 8% to 10%.
Studies estimating price effects on substitutions from unhealthy to healthy food and price responsiveness among at-risk populations are particularly needed.
- ABSTRACT: In light of proposals to improve diets by shifting food prices, it is important to understand how price changes affect demand for various foods.
2003
- (Cooper, 2003) ⇒ John C.B. Cooper. (2003). “Price Elasticity of Demand for Crude Oil: Estimates for 23 Countries." OPEC Review, 27(1).
- ABSTRACT: This paper uses a multiple regression model derived from an adaptation of Nerlove's partial adjustment model to estimate both the short–run and long–run elasticities of demand for crude oil in 23 countries. The estimates so obtained confirm that the demand for crude oil internationally is highly insensitive to changes in price.