The percentage method uses the formula (percentage change in quantity / percentage change in price). The total expenditure method observes if consumer spending on a good rises or falls after a price change. For example, if kerosene price rises 10% and demand falls 15%, elasticity is 1.5, and total expenditure by families would likely decrease.
In our subsidy analysis for the state, I must use these calculations, but the true cost is seen in the ration shop queues. When we adjust a subsidy, the percentage change on paper is clean, but the expenditure method reveals the actual burden shifting to the poor household's *kharcha*. My own calculations for my daughter's fees mean I understand elasticity not just as a formula, but as a family's tightened budget.
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