Expenditure and household‐size elasticities in Malawi: Urban‐rural comparisons, demand projections and a summary of East African findings

Abstract

The purpose of this paper is to present estimates of expenditure elasticities and household‐size elasticities derived from nationwide budget‐survey data of both urban and rural households conducted by the National Statistical Office of Malawi. All too often demand projections are based on demand elasticities derived from small samples in the capital city which can give a highly misleading picture of how demand may be expected to grow. Urban/rural differences in elasticities and possibly differences between different urban areas contribute to these inaccuracies. These possibilities are examined in sections 5 and 6 which present and discuss the results and make some tentative demand projections. The sample functional form utilized, and the estimation technique are discussed in sections 2, 3 and 4 respectively. In section 7 results of several different elasticities studies conducted in Eastern Africa are presented and compared.