Allowance and Consumption libre
Relationship between Weekly Allowance and Consumption Expenditures of
BS ABE Students: A Multi-Variable Regression Analysis1
Legaspi, Luyjilene V.
Ricalde, Ruby Grace J.
Villa, Katrina P.
BS Agribusiness Economics
University of the Philippines Mindanao
Davao City
December 2014
1
Submitted in partial fulfilment of the requirements in Econometrics under Mr. Harvey Niere,
first semester of the A.Y. 2014-2015.
TABLE OF CONTENTS
I. INTRODUCTION
1.1. Background of the Study
1.2. Theoretical Framework
II. METHODOLOGY
III. RESULTS AND DISCUSSION
3.1 Data Modelling
3.2 Normality Test
3.3 Test for Multicollinearity
3.4 Test for Heteroscedasticity
IV. SUMMARY AND CONCLUSION
V. RECOMMENDATIONS
VI. APPENDICES
VII. REFERENCES
2|Page
INTRODUCTION
1.1 Background of the Study
College is a stage in life where most of the people tend to live independently. College students are more likely to live far from their homes and families, but there are also some who are residing with their parents due to the location of the school to their houses. Thus, most of the students’ allowances are given in a weekly or monthly basis and are the only ones responsible in the decision-making with regards to their spending.
This study aims to determine the relationship between the weekly allowance of BS
Agribusiness Economics (BS ABE) students of the University of the Philippines (UP)
Mindanao and their consumption expenditures through multi-variable regression analysis.
Multiple Regression analysis is a method for researches on changing proportion between dependent variable and series of independent variables. Its general mathematical model is:
Y = β0 + β1X1+ β2X2 + … + βρXρ + ϵ where β is the parameter to be estimated, Xi is the observed value, ϵ is the random variable obeying standard normal distribution N(0,1).
The following classical assumptions must be considered to come up with the linear regression model:
Assumption 1: The regression model is linear in parameters,
Yi = β1 + β2Xi +ui
BS ABE Students: A Multi-Variable Regression Analysis1
Legaspi, Luyjilene V.
Ricalde, Ruby Grace J.
Villa, Katrina P.
BS Agribusiness Economics
University of the Philippines Mindanao
Davao City
December 2014
1
Submitted in partial fulfilment of the requirements in Econometrics under Mr. Harvey Niere,
first semester of the A.Y. 2014-2015.
TABLE OF CONTENTS
I. INTRODUCTION
1.1. Background of the Study
1.2. Theoretical Framework
II. METHODOLOGY
III. RESULTS AND DISCUSSION
3.1 Data Modelling
3.2 Normality Test
3.3 Test for Multicollinearity
3.4 Test for Heteroscedasticity
IV. SUMMARY AND CONCLUSION
V. RECOMMENDATIONS
VI. APPENDICES
VII. REFERENCES
2|Page
INTRODUCTION
1.1 Background of the Study
College is a stage in life where most of the people tend to live independently. College students are more likely to live far from their homes and families, but there are also some who are residing with their parents due to the location of the school to their houses. Thus, most of the students’ allowances are given in a weekly or monthly basis and are the only ones responsible in the decision-making with regards to their spending.
This study aims to determine the relationship between the weekly allowance of BS
Agribusiness Economics (BS ABE) students of the University of the Philippines (UP)
Mindanao and their consumption expenditures through multi-variable regression analysis.
Multiple Regression analysis is a method for researches on changing proportion between dependent variable and series of independent variables. Its general mathematical model is:
Y = β0 + β1X1+ β2X2 + … + βρXρ + ϵ where β is the parameter to be estimated, Xi is the observed value, ϵ is the random variable obeying standard normal distribution N(0,1).
The following classical assumptions must be considered to come up with the linear regression model:
Assumption 1: The regression model is linear in parameters,
Yi = β1 + β2Xi +ui
References: Libranza, et. al. (2013). Categorical Assessment of the Factors Affecting the Decision of Students to Enrol in UP Mindanao Academic Press, London (1999) Friedman, M.: A Theory of the Consumption Function (1957) Modigliani F., Brumberg, R.: Utility Analysis and the Consumption Function: An Rutgers University Press, New Brunswick (1954) Duesenberry, J.S.: Income, Saving and the Theory of Consumer Behaviour University Press, Princeton (1949) Haavelmo, T.: Methods of Measuring the Marginal Propensity to Consume Assoc.42, 105–122 (1947) 15 | P a g e