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:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
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:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education