Market Transactions and Hypothetical Demand Data: A Comparative Study

Abstract

Abstract Empirical demand studies have been based on data from (a) actual market transactions or (b) hypothetical questions. Many social scientists are skeptical of the accuracy of responses to hypothetical questions, yet few studies assess the quality of this type of data. This article directly compares the demand relations obtained from actual market transactions and hypothetical survey responses using primary field data and limited dependent variable regression analysis. Using a log-likelihood ratio test, the null hypothesis that the two demand relations are statistically identical cannot be rejected at the 1% level of significance.