Question 3 Consider the table below with regression output from two OLS regressions estimating the share of household budget devoted to food and adult goods (tobacco and alcohol) in some country using the Working-Leser Engel curve specification: K-1 Thk w₁ = a₁ + Bln (²) + nin(n) + Σ Tik +7₁2+U₂ n k=1 where w, is the share of total household expenditure on good i (either food or tobacco and alcohol) measured as a proportion between 0 and 1, y is total household expenditure, n is household size, n, e {1,..., K} is the number of people in age-sex category j, z is a vector of other household characteristics, and u is an error term for the ith good. Assume that all coefficients are statistically significant. Table 1: OLS regression coefficients of household share of expenditure spent on food and adult goods In (2) In(n) Ratio of males: 0-2 years. 3-4 years 5-14 years 15-54 years 55+ years Ratio of females: 0-2 years 3-4 years 5-14 years 15-54 years Food Tobacco and Alcohol -0.70 -0.33 -0.02 0.12 -1.46 -1.63 -4.78 -4.63 -5.11 -2.44 -0.46 -0.38 1.25 -0.42 -0.12 -0.17 0.57 0.87 -0.04 -0.01 -0.13 -0.01 3.1 Briefly discuss the usefulness of Engel curves as a technique which allows for better insight into the intra-household allocation of resources. 3 3.2 Considering the regression output above, is there evidence of gender discrimination within households? Discuss. 3.3 For the food share regression, answer the following questions: (a) Interpret the coefficient of per capita household expenditure. Specifically, discuss whether it provides evidence for or against Engel's Law. Based on this, is food a necessity or a luxury good? Why? (b) What information could one obtain from the sign of the coefficient of household size:
Question 3 Consider the table below with regression output from two OLS regressions estimating the share of household budget devoted to food and adult goods (tobacco and alcohol) in some country using the Working-Leser Engel curve specification: K-1 Thk w₁ = a₁ + Bln (²) + nin(n) + Σ Tik +7₁2+U₂ n k=1 where w, is the share of total household expenditure on good i (either food or tobacco and alcohol) measured as a proportion between 0 and 1, y is total household expenditure, n is household size, n, e {1,..., K} is the number of people in age-sex category j, z is a vector of other household characteristics, and u is an error term for the ith good. Assume that all coefficients are statistically significant. Table 1: OLS regression coefficients of household share of expenditure spent on food and adult goods In (2) In(n) Ratio of males: 0-2 years. 3-4 years 5-14 years 15-54 years 55+ years Ratio of females: 0-2 years 3-4 years 5-14 years 15-54 years Food Tobacco and Alcohol -0.70 -0.33 -0.02 0.12 -1.46 -1.63 -4.78 -4.63 -5.11 -2.44 -0.46 -0.38 1.25 -0.42 -0.12 -0.17 0.57 0.87 -0.04 -0.01 -0.13 -0.01 3.1 Briefly discuss the usefulness of Engel curves as a technique which allows for better insight into the intra-household allocation of resources. 3 3.2 Considering the regression output above, is there evidence of gender discrimination within households? Discuss. 3.3 For the food share regression, answer the following questions: (a) Interpret the coefficient of per capita household expenditure. Specifically, discuss whether it provides evidence for or against Engel's Law. Based on this, is food a necessity or a luxury good? Why? (b) What information could one obtain from the sign of the coefficient of household size:
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Transcribed Image Text:Question 3
Consider the table below with regression output from two OLS regressions estimating the share
of household budget devoted to food and adult goods (tobacco and alcohol) in some country
using the Working-Leser Engel curve specification:
K-1
w; = a; + B,ln () + niln(n)+ E Vik
+ T;z + ui
k=1
where w; is the share of total household expenditure on good i (either food or tobacco and
alcohol) measured as a proportion between 0 and 1, y is total household expenditure, n is
household size, n; e {1, .., K} is the number of people in age-sex category j, z is a vector of other
household characteristics, and u is an error term for the ith good. Assume that all coefficients
are statistically significant.
Table 1: OLS regression coefficients of household share of expenditure spent on
food and adult goods
Food
Tobacco and Alcohol
In (4)
-0.70
-0.33
In(n)
-0.02
0.12
Ratio of males:
0-2 years
-1.46
-0.42
3-4 years
-1.63
-0.12
5-14 years
-4.78
-0.17
15-54 years
-4.63
0.57
55+ years
-5.11
0.87
Ratio of females:
0-2 years
-2.44
-0.04
3-4 years
-0.46
-0.01
5-14 years
-0.38
-0.13
15-54 years
1.25
-0.01
3.1 Briefly discuss the usefulness of Engel curves as a technique which allows for better insight
into the intra-household allocation of resources.
3.2 Considering the regression output above, is there evidence of gender discrimination within
households? Discuss.
3
3.3 For the food share regression, answer the following questions:
(a) Interpret the coefficient of per capita household expenditure. Specifically, discuss whether
it provides evidence for or against Engel's Law. Based on this, is food a necessity or a
luxury good? Why?
(b) What information could one obtain from the sign of the coefficient of household size:
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