Estimate average annual household expenditure in each age- Marketing Management
Consumer Demographics Assignment-
1. Presented below are the results of quadratic regression analysis (y= a + bx – cx2) of weekly household income (y) and expenditure (y) according to the age of the household head (x) in Australia in 2003-2004. Using the information provided:
1) Estimate weekly household income (y) and expenditure (y) if the age of the household head (x) was 25, 30, 35, 40, 45, 50, 55, 60, 65 and 70 years (Note: Using Excel is recommended for this question).
2) Using the results of the estimation in part 1), draw the Hump-shaped graphs of income and expenditure according to the ages of household head in one chart (Note: Using Excel is recommended for this question).
3) Discuss Modigliani’s Life-cycle Hypothesis and explain life-cycle humps in household income and household expenditure.
4) Referring to the Life-Cycle Hypothesis discussed in 3), analyse the shapes and patterns of weekly household income and expenditure according to the ages of household head in Australia in 2003-2004.
| a Intercept | b
Coefficient of x |
c
Coefficient of x2 |
|
| Average household weekly income |
-121.40 |
75.56 |
0.85 |
| Average household weekly expenditure |
-114.35 |
71.08 |
0.85 |
2. Given below is quintile distribution of average household weekly expenditure. Estimate the Gini Coefficient.
| Quintile |
Number of Households |
Average weekly Household
Expenditure ($) |
| Q1 |
2,000 |
605 |
| Q2 |
2,000 |
810 |
| Q3 |
2,000 |
1,150 |
| Q4 |
2,000 |
1,379 |
| Q5 |
2,000 |
2,265 |
3. Presented below are the US Department of Commerce (DOC) household expenditure equivalence measures and average number of people in household and annual household expenditure by the age of household head.
1) Estimate average annual household expenditure in each age group of household head taking into account the average number of people in the household and the US Department of Commerce (DOC) equivalence scales.
2) Discuss the rationale of using equivalent units in estimating average annual household expenditure.
| Household size | US DOC equivalent units | Increment |
| 1 | 1.00 | |
| 2 | 1.28 | 0.28 |
| 3 | 1.57 | 0.29 |
| 4 | 2.01 | 0.44 |
| 5 | 2.37 | 0.36 |
| Age of household head | Average number of people in household | Annual household expenditure |
| <25 | 2.0 | 30,320 |
| 25-34 | 2.8 | 49,510 |
| 35-44 | 3.2 | 56,150 |
| 45-54 | 2.7 | 60,160 |
| 55-64 | 2.1 | 54,280 |
| 65-74 | 1.8 | 44,920 |
| >74 | 1.5 | 31,240 |
4. Write a short essay of 800 – 1,000 words on “The impacts of population growth on food consumption, economic growth, income per capita growth, and market growth”. You are expected to refer to at least four additional references other than the text book chapters and lecture notes. It is expected that a suitable referencing style (including in-text references) is to be used, such as Harvard referencing, American Psychological Association (APA) referencing style, or a style suitable in your disciplinary areas. The essay will be assessed by its clarity, relevance and extensiveness of reference.
