Table 2: OLS regression coefficients of household share of expenditure spent on mealie meal and meat Mealie meal Meat In () -0.65 0.59 In(n) -0.01 -0.00 Ratio of males: 0-2 years -1.41 0.67 3-4 years -1.66 0.55 5-14 years -3.78 0.03 15-54 years -3.58 0.68 55+ years -4.18 0.21 Ratio of females: 0-2 years -2.14 -0.38 3-4 years -0.88 -0.22 5-14 years -1.61 0.01 15-54 years 2.34 0.99 2.1 Considering the tables above, what evidence is there that Engel's Law holds for this coun- try? 2.2 In table 2, discuss the meaning of the coefficients on the variables capturing the ratio of females and males for various age categories. 2.3 Interpret the coefficients of per capita household expenditure in table 2. Based on this, is mealie meal a necessity or luxury good? And meat? Why? 2.4 What information could one obtain from the sign of the coefficient of household size in table 2?
Table 2: OLS regression coefficients of household share of expenditure spent on mealie meal and meat Mealie meal Meat In () -0.65 0.59 In(n) -0.01 -0.00 Ratio of males: 0-2 years -1.41 0.67 3-4 years -1.66 0.55 5-14 years -3.78 0.03 15-54 years -3.58 0.68 55+ years -4.18 0.21 Ratio of females: 0-2 years -2.14 -0.38 3-4 years -0.88 -0.22 5-14 years -1.61 0.01 15-54 years 2.34 0.99 2.1 Considering the tables above, what evidence is there that Engel's Law holds for this coun- try? 2.2 In table 2, discuss the meaning of the coefficients on the variables capturing the ratio of females and males for various age categories. 2.3 Interpret the coefficients of per capita household expenditure in table 2. Based on this, is mealie meal a necessity or luxury good? And meat? Why? 2.4 What information could one obtain from the sign of the coefficient of household size in table 2?
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Transcribed Image Text:Table 2: OLS regression coefficients of household share of expenditure spent
on mealie meal and meat
Mealie meal
Meat
In ()
In(n)
-0.65
0.59
-0.01
-0.00
Ratio of males:
0-2 years
-1.41
0.67
3-4 years
-1.66
0.55
5-14 years
-3.78
0.03
15-54 years
-3.58
0.68
55+ years
-4.18
0.21
Ratio of females:
0-2 years
-2.14
-0.38
3-4 years
-0.88
-0.22
5-14 years
-1.61
0.01
15-54 years
2.34
0.99
2.1 Considering the tables above, what evidence is there that Engel's Law holds for this coun-
try?
2.2 In table 2, discuss the meaning of the coefficients on the variables capturing the ratio of
females and males for various age categories.
2.3 Interpret the coefficients of per capita household expenditure in table 2. Based on this, is
mealie meal a necessity or luxury good? And meat? Why?
2.4 What information could one obtain from the sign of the coefficient of household size in
table 2?

Transcribed Image Text:2. Consider the following two tables with output derived from data of a single country.
Table 1 sets out expenditure shares for households at various points on the income distri-
bution.
1
Table 1: Expenditure shares for households
Expenditure shares (percentage) at:
Expenditure category median of income
bottom 10% of
top 10% of
distribution
income
income
distribution
distribution
Food
46.3
50.2
18.3
Rent
19.1
25.8
27.7
Transport
5.8
5.5
9.8
Household Items
1.9
0.1
10.4
Healthcare
1.1
0.5
13.6
Education
12.0
2.4
15
Personal items
5.3
5.1
2.3
Energy
3.1
2.3
0.8
Clothing
2.2
1.2
1.9
Miscellaneous
3.2
2.6
4.2
Total
100
100
100
Table 2 sets out the regression output from an OLS regression estimating the share of
household budget devoted to mealie meal and meat using the Working-Leser Engel curve
specification:
K-1
wi = ai + Biln (2) + niln(n)+
Yik-
n
+ T;Z + ui
k=1
where w; is the share of total household expenditure on food item i (mealie meal or
meat) 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. Assume that all coefficients are
statistically significant.
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