Many people believe elves belong in fairy tales along with dragons, unicorns and hobbits.
But public opinion polls in Iceland carried out as recently as 2007 suggest that up to 80 percent of respondents believe they exist.
Although there have been no confirmed sightings, the rugged volcanic island-state is full of people researching the topic.
Unlike modern-day depictions in the Lord of the Rings, elves in Iceland generally mind their own business and prefer a life of seclusion away from people.
But, when pressured by increasing urbanisation, they are considered to be very irritable and at times mischievous.
Speaking to Agence France Presse, anthropologist Magnus Skarphedinsson said he is convinced they exist.
Skarphedinsson even runs his own Elf School in the Icelandic capital Reykjavik. There, he passes on accounts of encounters to his students.
One such account is that of a fisherman from the 1920s who was gifted with the ability to see elves, who largely remain unseen to the general public.
The fisherman would observe the elves, who would avoid setting off to sea if they sensed a storm was coming.
His insight into their hidden world saved his fellow fishermen from getting caught in a major storm on at least one occasion in February 1921, Skarphedinsson tells his students.
Why doesn't the U.S. have a cool mythical creature? Norway has trolls, Iceland has elves, China has dragons, Ireland has the Leprechaun...
— Bretaña (@BriNAYnayJ) May 13, 2016
Another account is that of a woman who in 2002 came across a teenage boy who claimed he had met her 53 years ago at a former address, where her daughter used to play with an "invisible" friend called Maggi.
Her daughter immediately recognised the boy upon hearing his description.
Belief in elves, who are said to roam the Icelandic countryside and dwell in rocks, has even caused construction companies to divert roads from their planned route.
Skarphedinsson tells of an incident in 1971 when work on a new national highway from Reykjavik to the northeast was disrupted due to repeated unusual technical difficulties.
He claims elves living in a nearby rock caused the disruptions because they were not happy about having their home moved.
But a deal was finally struck, with the elves agreeing to leave the rock for a week so it could be moved just 15 metres from its original position.
"This is probably the only country in the world whose government officially talked with elves," Skarphedinsson told AFP.
Elves have such a good life in Iceland. At most places you can spot a cute little elf… https://t.co/JAN0w6BxLs
— D A N I E L (@clearskyx) April 24, 2016
In 2013, protesters halted work on a highway linking the Alftanes peninsula to the Reykjavik suburb of Gardabaer because it would result in the moving of a rock used by elves as a chapel.
One of the participants in the protest was Ragnhildur Jonsdottir, who says she can see the elves. She told The Guardian that the elves contacted her in 2012 and asked her to save their chapel.
Due to the number of enquiries coming in, the Icelandic Road and Coastal Administration has started issuing a five-page standard response to the media.
"It cannot be denied that belief in the supernatural is occasionally the reason for local concerns and these opinions are taken into account just as anybody else’s would be," the statement says.
"Issues have been settled by delaying construction projects so that the elves can, at a certain point, move on."
— Yonderbound (@yondertribe) April 30, 2016
Icelandic politician Arni Johnsen previously told the Iceland Review that he had an encounter with elves after he had a serious car accident in 2010.
He said his SUV landed beside a boulder which housed three generations of elves. He later had the boulder moved near his home when the highway was expanded.
Even Iceland’s iconic singer Bjork admitted to US television host Stephen Colbert in 2012 that belief in elves is common in her country.
"It's sort of a relationship with nature, like with the rocks," she said. "[The elves] all live in the rocks, so you have to. It's all about respect, you know."
Photographer Svala Ragnars has made a name for herself with her album in progress entitled "The Elves Point of View" in which she captures a number of mystical rocks dotted all around the country where it's believed elves live.
"The Elves Point of View project seeks to document the locations where the belief in elves has changed the face of modern living," Ragnar writes on her website.
"It tells the stories behind elfin monuments that remain in the urban landscape, many of which only existed as verbal legends."