Ex ante is a term from Latin that means before the event. It is used in economics, in general, to name the projected results of one or more decisions.
We are referring then to the analysis prior to an event. The opposite is ex post which is synonymous with subsequent.
Uses of the term ex ante
Some uses of the term ex ante are:
- Finance: It is used to refer to the expected profitability of a financial security or portfolio. It is an estimate, but not an actual result.
- Contracts: Resources for future projects are assigned ex ante, that is, in advance. This, in order to guarantee the respective investment.
- Macroeconomics: Ex ante saving and investment are those planned, for example, for next year, that is, it is a goal. Meanwhile, the ex post data are those that are actually recorded, after the period in question.
Ex ante evaluation of projects
The evaluation of a project is carried out in three key moments: Ex ante, at the moment of its completion and ex post. In this section, we will focus on the first phase.
The preliminary study consists of contrasting the possible impacts of the decisions that are part of a project.That is, different scenarios are compared, performing a cost / benefit analysis. This methodology can be applied, for example, in public investments in different areas such as infrastructure, health, employment, environment, among others.
To develop this type of evaluation, the indicators of interest are selected first, whether quantitative or qualitative. We do not refer, for example, to the Net Present Value (NPV) or the Internal Rate of Return (IRR).
In this way, a baseline or starting point is established that will be compared with the estimated results. This, always taking the same time horizon and target audience.