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MOVING FORWARD BY LOOKING BACK: COMPARING LABORATORY RESULTS WITH EX ANTE MARKET DATA

Authors

  • JANIE M. CHERMAK,

    1. Chermak: Professor, Department of Economics, University of New Mexico, Albuquerque, NM 87131. Phone 505-277-4906, Fax 505-277-9445, E-mail jchermak@unm.edu
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  • KATE KRAUSE,

    1. Krause: Professor, Department of Economics, University of New Mexico, Albuquerque, NM 87131. Phone 505-277-3429, Fax 505-277-9445, E-mail kkrause@unm.edu
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  • DAVID S. BROOKSHIRE,

    1. Brookshire: Professor, Department of Economics, University of New Mexico, Albuquerque, NM 87131. Phone 505-277-1964, Fax 505-277-9445, E-mail brookshi@unm.edu
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  • H. STU BURNESS

    1. Burness: Professor Emeritus, Department of Economics, University of New Mexico, Albuquerque, NM 87131. Phone 505-277-5304, Fax 505-277-9445, E-mail burness@unm.edu
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    • This material is based upon work supported by SAHRA (Sustainability of semi-Arid Hydrology and Riparian Areas) under the STC Program of the National Science Foundation, Agreement No. EAR-9876800. Opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of SAHRA or of the National Science Foundation. I. Abibova, J. Little, A. Kaminsky, J. Clark, and G. Kervin assisted with experiment administration. We'd also like to thank M. Ewers for research assistance, J. Witherspoon for providing background on the Albuquerque Water Utility, and the City of Albuquerque for providing the market data.


Abstract

We compare individual consumer response between ex ante market data collected by a water utility and ex post experimentally generated data. The experimentally generated data are matched to each participant's water bill history, which predates the experiment. This differentiates our research from prior efforts, which analyze market and experimental data with similar chronologies. For roughly 70% of the participants there is no statistical difference between water demand elasticities estimated using laboratory data and those estimated from market data. Our results provide initial support for the use of experimental procedures to generate missing data regarding hypothetical consumer response. (JEL C9, D12, Q25)

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