Engel law: on the estimation of commodity and food consumption ratios for total, urban, and rural Philippines
Date
2003-10
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Abstract
The paper aimed to analyze the commodity and food-groups expenditure ratios of Filipino households, with special emphasis· on the difference between urban and rural dimension, and on shifts in expenditure ratios over time. This is rooted on the postulate of the Engel Law. Using the Seemingly Unrelated Regression, the paper determined the relationship between income (total expenditure) and the expenditure ratios of several commodity items and food groups and as well as their luxury and necessity characteristics. The regression estimates revealed that there are variations between the expenditure ratios of urban and rural households. There are commodities that are expected to be luxury goods that turned out to be necessities such as alcoholic beverages and tobacco. The contrary is revealed for education and medical care. Therefore, policies that would aim to reduce variations in the two areas should consider making goods more accessible. to rural areas where insufficiency of most commodities is evident.
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Keywords
Engel law, Commodity, Food consumption, Household consumption, Urban household, Rural household