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Trying to provide precise but intuitive explanations on how the terms "ex-ante" and "ex-post" are used in economics and in the context of econometrics (e.g., impact study, randomized controlled trials).

Another two terms students get confused are: "extensive" and "intensive" margins.

Two questions:

  1. Do you have any good reference readings that an undergraduate econ major can read and try to understand these terminologies without office hour visits?

  2. What would be your explanation if a student visited your office hours and was confused about these two terms being used in both theoretical and empirical studies?

My approach has been always giving an example of a policy change in an empirical study set up.

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    $\begingroup$ Can you provide some examples that confuse your students? Ex-ante, ex-post ~ before the event, after the event. With this translation, it seems to me most sentences should be comprehensible. As for memorizing the words ante and post, you can refer them to the AM/PM signs of a digital watch. $\endgroup$
    – Giskard
    Sep 20, 2023 at 19:20

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Ex Ante & Ex Post

As mentioned in the comments ex ante and ex post meanings are before and after something respectively. For example, if model says the entry costs are sunk ex post but not ex ante it means you can treat them as sunk after you pay them but not before. The usage, in econometrics is exactly the same it’s always before (ex ante) or after (ex post) something.

I don’t see how much confusion can arise here outside of student simply don’t understanding the meaning of these Latin phrases, because they are used in literal sense so as long as you know what the words mean there is not much to be confused about here.

There isn’t really an intuitive explanation, it’s like asking what is intuition for words before and after. Before simply means occurring prior to something and after occurring following something.

This is not even economics it’s just ‘fancy’ Latin language usage. Like saying ‘heterogenous’ instead of ‘different’, or ‘et cetera’ (etc) instead of saying ‘and so forth’.

People use these Latin phrases because before English most scientific work was published in Latin, so it’s nod to those old days and I guess some people also like to use Latin/Greek to make their writing appear more smart or fancy. Students just have to learn these to ‘fit in’ with academic crowd, same ways as you would learn some street slang if you would try to fit in some biker gang or something.

Intensive & Extensive Margin

Again these are just words that are used consistently, so you just need to understand their meaning. This time they are not even Latin words. The only source you need is something like Oxford dictionary of economics entries for intensive and extensive margin.

Intensive margin:

Is (typically discrete) change in level of already preexisting activity. When already employed worker works 1 hour more, or if truck owned by company is used more etc. So basically how intensively is a resource used at a margin.

Usage in econometrics is exactly the same when you estimate something on intensive margin like labor supply it means you are estimating how much already pre existing workers work more or less.

Extensive Margin:

Is (typically discrete) change to a total level of activity on a margin. For example, change of number of workers at factory A from 10 to 11 would be change on extensive margin. Or when talking about capital when company X increases number of trucks form 20 to 25 again it’s change on extensive margin. So basically to what extent the resource is used on a margin.

Usage in econometrics is exactly the same. If someone says I estimate labor supply change on extensive margin they just mean estimating how the number of employed people changed.

Again I am not sure what kind of intuition you are looking for. It’s like asking intuition why dogs are called dogs and not mugaboink or some other word. Students just need to learn meaning of the terms here.


PS: My approach is just to assume in undergraduate classes that student is not aware of terminology or Latin phrases so I just usually first time explain them in one way or another. For more complex phrases like intensive margin I provide explanations with examples, for something like ex ante I just briefly first time say right after, “meaning before…”, or if I talk about firm heterogeneity I will first time immediately follow up with “meaning how firms differ from each other” etc (no pun intended).

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  • $\begingroup$ 1. In this answer you refer to the "comments". I take it you mean my comment, since it is the only one. Linking or other types of reference are possible. Reference is of course not obligatory, but it seems to me the first subchapter of your answer (Ex Ante & Ex Post) merely rephrases what I wrote. $\endgroup$
    – Giskard
    Sep 21, 2023 at 6:12
  • $\begingroup$ 2. You write "I don’t see how much confusion can arise here", which also echoes my comment. OP likely has a reason, so why post an answer instead of asking for clarification in a comment? $\endgroup$
    – Giskard
    Sep 21, 2023 at 6:13
  • $\begingroup$ 3. The second subchapter of your answer (Intensive & Extensive Margin), the one that is completely different from my comment has ... nothing to do with the question? Is this something that was just on your mind? Or is this writing practice? It is good to write often. $\endgroup$
    – Giskard
    Sep 21, 2023 at 6:13
  • $\begingroup$ @Giskard how do you get link to a comment? I dont mind referencing it, I always try to do that but I am not sure how to get path to it $\endgroup$
    – 1muflon1
    Sep 21, 2023 at 10:01
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    $\begingroup$ "how do you get link to a comment?" You click the timestamp next to the comment. "I dont mind referencing it" thank you! $\endgroup$
    – Giskard
    Sep 21, 2023 at 11:10

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