HOUSEHOLD FOOD CONSUMPTION ANALYSIS IN TANZANIA: DEMOGRAPHIC

EFFECTS

QUANTITATIVE ANALYSIS

By
Issa R Mohamedi

A Research Report to be Submitted to the Faculty of Science and Technology as a Partial

Fulfillment of the Requirement for Award of Degree of Bachelor of Science in Applied
Statistics of Mzumbe University

April, 2020

i
 CERTIFICATION

The undersigned certify that I have read and hereby recommend for acceptance by the Mzumbe

university a research report entitled: “Household Food Consumption and Analysis in

Tanzania: Weak Separability and Demographic Effects”. In partial fulfillment of the

requirement for award of Bachelor degree of science in Applied Statistics of Mzumbe

University.

……………………………....
Dr. Tukae Mbegalo (PhD)
(Major Supervisor)

Date ........../……../………....

……………………………....
Internal Examiner

Date ........../……../………....

Accepted for the Board of Faculty of Science and Technology

ii
 CHAIRPERSON / FACULTY BOARD

DECLARATION AND COPYRIGHT

I, Issa R Mohamedi, hereby declare that this research project is a true reflection of

my own original work, and that this work or part of it has not been submitted for a

degree in any other institution of higher education for Bachelor of Science in Applied Statistics

or any other degree award.

……………………………....
Mr. Issa R Mohamedi
(Bachelor Degree Candidate)

Date ........../……../………....

This Research Report is copyright material protected under the Berne Convention, the

Copyright Act 1999 and other international and national enactment, in that behalf, on

intellectual property; no part of this report may be produced, stored in any retrieval

system, or transmitted in any form or by any means. However, for advancement of

iii
knowledge, part of this report can be used with prior permission of the author or Mzumbe

University on the behalf.

ACKNOWLEDGEMENT

Great thanks to Almighty God for blessing me with good health, wisdom, patient and other

essential ingredients of life to undertake this research work. My heartfelt gratitude goes to my

major supervisor, Dr. Tukae Mbegalo (PhD) for his professional guidance constructive criticisms

and encouragement during the research period, sincerely he deserves all kinds of credits and

appreciation.

I extend my sincere gratitude to Sokoine University of Agriculture Laboratory for

Interdisciplinary Statistical Analysis (SUALISA) management under supervision of Dr.

Benedicto Kazuzuru (PhD) for giving me an opportunity, support and encouragement to

complete my report in conducive environment.

I owe a special thanks to my lovely mother, Ms. Mayasa H Mwenga for her moral support

throughout the period of undertaking my study, and the good care; she made my academic

journey so comfortable. In addition, I appreciate the calmness of my family members Abdillah R.

Mbombwe and Maimuna R. Mbombwe, which gave me enjoyable moment during my entire

studies.

Nevertheless, I would like to thanks all my classmates for their support during good and

bad times cannot be ignored. Thank you very much.

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 DEDICATION

I dedicate this work to my lovely late Father Mr. Rajabu Mohamedi Mbombwe. Also to

my lovely Mother Mayasa H Mwenga for their tirelessly support, both moral and encouragement

that they had been extending to me from the early stages of my academic life time up to

this juncture. I really appreciate them all for their loving care and support.

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 LIST OF ABBREVIATIONS AND ACRONYMS

EA: Enumeration Area

HH: Household
HHID: Household Identification
LSMS – ISA Living Standard Measurement Study – Integrated Survey on Agriculture
TZNPS: Tanzania National Panel Survey Data
NBS: Tanzania National Bureau of Statistics
LMIC’s: Lower and Middle Income Countries

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ABSTRACT

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 CHAPTER ONE

1.0 INTRODUCTION

This chapter provides the background to the study concerning about the effectiveness of the

demographic factors and weak separability or two stage budgeting on household food

consumption analysis in Tanzania. This chapter also outlines the objectives of the study, the

affirmation of the problem, and the meaning and extent of the problem.

1.1 Background of the study

In recent years, most of the lower and middle income countries where experience with large

percentage of household consumption expenditure than other non-food consumptions, that leads

to the increasing in food demand analysis based on household survey, because these consumer

surveys are particularly useful to provide information on specific subpopulation of households

that are more likely to be affected by changes in commodity prices or household incomes.

According to the Engel’s law, state that as the incomes rise both within and across countries, the

expenditure on other things increases even more as the share of the total income spent on food

decrease. So it is documented that the poorer and more vulnerable a household, as the larger the

share of household income spent on food. Through this observation, the household food

expenditure share can be helpful to understand the nature and impacts of the price changes or

fluctuations on food consumption. Consequently, depending on the specific foods, household

that are very poor and already in subsistence consumption will be unable to substitute cheaper

foods and will forced to spend more on basic staples. So that will tend leads the needs for

reducing the non-food expenditures, for instance health, entertainment, education and transport

as well as the reduction of their diets and quantity of food consumed of the least expensive foods.

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Recently, some of the literature, for instance Smith and Subandoro (2007) they propose

household that spend over 75% of their income on food are vulnerable and consequently food

insecure, and for those who have lower level of food insecurity spends less than 50% of their

income on food.

The household food consumption expenditure is an important indicator for food security because

it is very useful to identify populations that may be vulnerable to future stocks that could affect

food prices (Lele at al 2016). Also this indicator can be used for advocating and national

monitoring as well as to assess the trends of food security with in a country and

nongovernmental organizations. By World Food Programme, frequently they use this indicator

for assessing food insecurity and vulnerability to future stocks (Rose, 2012). Thus the food

consumption studies have a widely range and important for provision of better understanding on

how demand for food responds changes in food prices and households income.

Furthermore, in modern macroeconomics and monetary models assumptions mostly used for

food demand analysis are weak separability assumption and utility maximization for testing

preferences. The study investigates the food demand in Tanzania includes eleven food groups

that classified from fifty food commodities or types. However a full demand system for these

eleven food groups needs to estimate a large number of parameters. Therefore the uses of the

weak separability or two-stage budgeting approach is considered in order to reduce the number

of parameters to be estimated. In the first stage budgeting the total expenditure is allocated

between food and non-food commodities. Food expenditure is then allocated between the eleven

food groups in the second stage budgeting. Weakly separability is important for multiple stage

budgeting in demand system’s analysis. If food is assumed to be weakly separable from non-

food, then the consumer’s utility maximization decision can be decomposed into several budget

3
stages procedures (Deaton & Muellbauer, 1980). Also most of the empirical models commonly

are specified in budget-share or quantity-dependent form with the prices of a few closely related

goods and some measure of income as explanatory variables. Most often, the income variable is

a measure of total disposable income or total expenditure on all goods. Such specifications may

be ad hoc or derived from rigorous theoretical argument, but in either uncorrelated with the

explanatory variables in the model or irrelevant in the demand equation of interest if parameter

estimates are to be consistent and unbiased. Data limitations prevent explicitly including all

prices in a demand model, so the assumption of weak separability is often used to reduce the

number of prices which must be included in empirical analysis.

1.1.1 Overview of Household Food Expenditure in Tanzania

Tanzania is among of the world’s poorest countries; according to the World Bank, per capital gross

domestic product (GDP) in purchasing power parity (PPT) was $ 1700 in 2012 (World Bank, 2012), as well

household food insufficient and malnutrition is high. Also Tanzania is one of the 19 focus countries

under U.S Government’s Feed the Future initiative and is a recipient of U.S. foreign assistance. A

common intervention to improve food access has been increased promotion of agriculture production in

the hope that households will get increased income and enough access to food through the market

rather than through self-sufficiency as the currently principal tool used by Tanzania to address

households food access is the distribution of food aid to vulnerable households; recently, the

Government of Tanzania (GOT) introduced a system of cash transfers on pilot basis. The Government of

Tanzania (GOT) face a challenge on identify the households that most in need of assistance. GOT relies

on estimates of food availability to identify regions potentially in need of assistance, Since the Tanzania’s

Ministry of Agriculture forecasts production of basic food crops and converted to grain equivalent, as

4
well as the Ministry calculates whether this accessed to meet the food consumption needs of the

population. Another issue was that, it is estimated about 30 to 60 percent of farm production in

Tanzania is consumed at the farm; the remaining portion is marketed (Moshi et al.., 1998, Nkonya and

Parcel 1999) and one of the major factor enhancing this situation was the policy of household food self-

sufficiency implemented by mid-1970’s to mid-80s (Ackello-Ogutu and Echessah, 1998). The latter

required each household to produce enough food for their own consumption and the policy was

implemented through mandatory acreage allocation to production of food crops in each household and

by restricting selling. As the policy was later relaxed following market liberalization in 1985 and the food

security Act 1991. Nevertheless, it had considerable impact on development of subsistence food

consumption in both urban and rural areas.

1.2 Statement of the problem

In today’s dynamic world, the study of households food consumption analysis are very important

because may help in development of policies and strategies for protecting and eradicating of

socio-economic problems from financial risks among the households such as poverty, inequality

of wealth distribution and food security in the most LMIC’s . Also most of the LMIC’s the

economic growth and urbanization have contribute not only to an increase in incomes, but also to

drastic changes in the composition of the food demand. So that as the higher the incomes leads to

the greater demand for more expensive sources of calories such as meat, fish food and fruits

were increases while other declined.

On other hand, in modern macroeconomics and monetary models assumption used for food

demand analysis, a weak separability assumption and utility maximization for testing preferences

were applicable. As the results, food consumption can be expressed as a share of the total

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household consumption expenditure, so if food consumption expenditure increases that will lead

to threaten a household’s financial capacity to maintain other subsistence needs, and that may be

used as the measures for the above problems.

Many of the studies bearing on household food consumption analysis in Tanzania revealed

different results, goodness of fit, interpretations, elasticity estimates as well as predictive

performance because of the on different specifications in empirical demand models and

assumptions, estimation methods as well as the use of different periods analyzed for instance the

use of quarterly rather than annual data. For instance an empirical analysis on; Effects of market

production on rural household food consumption, Evidence from Uganda by Proscovia R Ntakyo

and An econometric analysis of household food expenditure system in Tanzania by January

Mafuru. All of the previously studies are consistent in indicting n inelastic demand for both

prices and income but both elasticities vary considerably and some issues like appropriate

specification of food demand equations remain unsolved.

Therefore, it was the focus of this study to fill the gap by applying the non-parametric methods to

assess the patterns of the food consumption in rural Tanzania and testing whether the food

consumption are weakly separable from the non-food consumption expenditure under the

considerations of the demographic effects. Because this study will applies the two stage

budgeting procedure, so in the first stage the study will estimate the demand for food and non-

food items. Then estimates the demand for each of the eleven foods groups in the second stage

budgeting.

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1.3 Research Objectives
1.3.1 General objective
The general objective of the study is to examine whether the food consumption are weakly

separable from other consumption goods.

1.3.2 Specific objectives

However, the specific objectives of this study are stated as follows

I. To examine the patterns of the food consumption in rural. As it will give an insight to
present the trends and pattern of food consumption expenditure of Tanzania.

II. To examine whether the food consumption are weakly separable from other
consumption goods.

1.4 Research questions

I. What are pattern of the food consumption in rural Tanzania?
II. Is the food consumption group weakly separable from other household consumption
goods?

1.5 Significance of the study

The outcome of this study will convey satisfactory confirmation on overview of the household
food expenditure patterns in rural Tanzania, and how the concept of the weak separability the
households to the analysis of share of the food expenditures as the measure of poverty in
Tanzania. This study will be relevant to different areas. For instance, Government, donors and
economic policy makers will benefits from this study as the will be able to gain insight on nature
and some factors that affects share of the household food expenditures, that will helps in
formulation and implications of heavily subsidized economics policies and strategies as well as
to strengthen their efforts for eradicating problems such as poverty, food insecurity and

7
inequalities welfare distribution in Tanzania. Moreover academicians will be benefit from the
findings of this study as it will add to the body of existing knowledge in analysis of food demand
system.

1.6 Scope of the study

This study involves an econometric estimations with a non-parametric approach to the share of
the food expenditures in rural Tanzania. This study is used the data from Tanzania National
Panel Survey from 2008/09 up to 2014/15 and the aim was to capture both long run adjustments
of households to regional differences in prices and to expected seasonal price movements, and
tend to reflect short-run reaction. Also the study will be confined a theory of Engel’s law in
which demand system approach implied by separability will be employed to estimate as a non-
parametric estimations.

1.7 Limitations of the study

This study limitation includes any factors that were present and hinder attainment of study
objectives. First, the data will be used in this study are secondary panel data which present the
past and may not directly apply for current situation because of the over changing operating
environment. This can make it is finding to be of little importance in predicting the future trends.

Although this study makes a number of contributions, there are need to expand into further
research from here by considering other variables that could best explained the nature and
variability of household food expenditures in Tanzania.

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 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction
This chapter presents the important theoretical and empirical literature reviews on the study on
impacts of the demographic and agricultural factors to the share of the food consumption
expenditure which compromised in three sections. The first section explores the theoretical
model supporting the study, the second section explores the empirical model pertaining to the
study and the last section will explores research gap and conceptual framework.

2.1 Definition of the key words

2.1.1 Food groups
Indeed, it is empirical in demand analysis to deal with all goods consumed by all of the
households. To facilitate the empirical analysis of food demand, we aggregate the major
components of food consumption into twelve groups as indicated in Table 1. In addition, we
assumed the separability of preference as found in most of the existent literature (B é ké , 2013).
Under this assumption, the preference within a given food group is independent of the choices in
other groups. The separability of preference also implies independence between the choice of
food items and non-food items. The grouping of the food products are closely related to the
classification adopted by the NBS.

2.1.2 Share of household food expenditures

Defined as the consumption expenditure on food divided by the total expenditure on consumer
goods and services by a household, that measuring the percentage of total food expenditures that
has been allocated to foods recommended for frequent consumption, food not recommended for
frequently and other foods as well as individual food groups such as cereals, fruits, vegetables,
and grains. This indictor is commonly calculated by using a household consumption and
expenditure survey, and it include the monetary value of the food purchased from market,
consumption from own production or received as a gift as well as in-kind payments and
transfers. The share of the household expenditure is equal to:

9
 Expenditure on food
× 100
Total Expenditure

2.2 Theoretical Literature Review

2.2.1 The Concept of Engel’s Curve Theory

The first study bearing on the food expenditures was done by the statistician Ernest Engel who
published a study for Prussian government in 1895. Engle observed an empirical regularity that
the food expenditure share in the household budget falls with income. This regularity is known in
the economic literature as Engel’s Law.

In addition, consumption function analysis established by the Ernest Engel come in a simplest
function form express the quantity of a commodity consumed as the function of income i.e

q i=f ( y ) ……………………………… (1)

Also it holds income elasticity that is ≤ 1 for necessities such as food. As this Engel’s Law
following two versions such as the more restrictive version and less restrictive version. With
modification expenditure on q i rather than physical quantity of commodity consumed, is
expressed as a function of income especially when the commodity in question is defined as
group of related commodities such as food. Rendering the dependent variable as expenditure is a
method of aggregating multi-commodity items. A side income, other variables are incorporated
which influence expenditure such as household size.

In other hand, since income and total expenditure are highly correlated the consumption function
or better still expenditure function, following Olayemi may be expressed as:

C ij =f ( E j ; N j )

Where C ij is expressed on a group of items i by household ; E j is the total expenditure by

household j and N j is the household size. The income elasticity previously referred becomes
expenditure elasticity. It is important to note that socio demographic factors such as size of
income, level of education, size of family and more have been found to influence household
expenditure pattern.

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Furthermore, according to this law ‘the poorer a family, the greater the proportion of its total

expenditure that must be devoted to the provision of food’ or ‘the greater the income, the smaller

the relative percentage of outlays for subsistence’ [Engel 1895]. An allocation of a high share of

household budgets to food can be therefore a sign of poverty, hence a quantitative analysis of

food share in the total expenditure is a very important problem. In the absence of a universally

accepted method of calculating poverty, household expenditures can be used to provide an

indication of inequality of wealth distribution and serve as an indicator of poverty [Martins

2007].

2.2.2 Concept of the Weakly Separability

The concept of weak separability has been used in many studies to estimate
household consumption behavior based on market expenditure data (Pollack and Wales,
1969, Lau et al., 1978, Abdulai and Auberta, 2003, Jung and Koo 2000, Luchin et al.,
2001). On the basis of expenditure elasticities as well as Marshallian and Hicksian
elasticities various policy implications have been derived. However, when a substantial
part of consumption is from subsistence production, the result is likely to differ from
when total household consumption is from the market.

Economists have used consumer theory to examine consumer behavior by

assuming that a consumer purchases goods and services with limited income and that
income is allocated among goods so as to maximize utility. Using weak separability
assumption, consumers allocate total expenditure in two stages budgeting approach (Goldman
and Uzawa, 1964). In the first stage, total expenditure is allocated between groups of goods,
while in
the second stage group expenditures are allocated between individual goods within a
specific group. Weak separability is often implemented in demand studies to specify an
empirically tractable model and to limit the number of parameters to be estimated (e.g.,
Eales and Wessells 1990; Piggott and Marsh 2003). Specifically to Tanzania, the major
food items for an ordinary household include cereals, grains, beef and fish. As a result,
the maintained hypothesis will be that these food items are related to each other as either
11
complements or substitutes, and that they are weakly separable from other consumption
goods.

Commodity group and separability (Two-stage budgeting)

TOTAL HOUSEHOLD EXPENDITURE

FOOD EXPENDITURE NON-FOOD EXPENDITURE

Cereals and Grains Housing

Roots and Tubers Health

Nuts and Pulses Transportation

Vegetables Education

Meat, Fish and Animal Entertainment

Product
Fruits

Milk/Milk Products

Fats/Oil

Sugar/Sugar Products & Honey

Spices/Condiments
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Figure 2.1: Possible Utility Diagram

2.3 Empirical Literature Review

Demand theory has been widely applied to determine individuals or households
consumption behavior. Expenditure and price elasticity provide valuable information on
how consumers react to price and income changes. This information has been useful in
designing food policy and research needs for various consumer categories (Lau et al
1978, Jung and Koo, 2000, Abdulai and Auberta, 2003).

Previous studies have been done in different countries concerning on food consumption analysis
such as;

Earlier demand studies have focused on model specifications that represent agent’s consumption
decisions (Pollack and Wales, Lau and Mitchell, 1971). In recent years, demand studies
particularly in developing countries have focused attention to analyzing consumer demand
behavior across differences income groups (Abdulai and Auberta, 2003). Findings from these
studies have been important for designing development policy options such as poverty
reduction programs targeting low-income families (i.e., food stamp, food support to the
poor, child food programs etc). However, despite extensive household demand studies
implemented in developing countries, there is little information on the effect of
subsistence consumption on household consumption behavior. Lau et al., (1978),
observed that in Taiwan, a household expenditure decision on agricultural items was
influenced by the level of non-cash consumption of agricultural products. Gibson (1998)
observed that in Papua New Guinea structural food demand and income elasticities were
different between rural and urban areas. Because rural households consume large parts
from their own production than urban households, different model specifications may be
required to account for the effect of subsistence consumption in households. Therefore,
omitting subsistence consumption in model specification could lead to incorrect inferences.
In addition, Piggott and Marsh (2003) incorporated pre-committed consumption in the

13
Generalized Almost Ideal Demand model to investigate the impact of food safety information in
US meat demand. The GTL model is used to estimate household food expenditures systems in
Tanzania. Because of structural differences households were grouped into rural and urban areas
and their expenditure systems are compared, particularly, the impact of precommitted quantities
on expenditure share, as well as cross and own-price demand elasticity. The advantage of this
specification is that it is possible to assess the degree of market-orientation between rural and
urban households. It is argued that the GAITL model is a flexible form and gives good results
compared to other models.

Although, another previously empirical studies concerning on consumption analysis that employ
an econometric models for estimations were as;

Orewa and Iyangbe (2009) conducted a research on socio-economic and household

characteristics that determine daily food calorie intake among rural and low-Income urban
households in Nigeria. The study analysis was based on linear, semi-log and double-log
estimations and reveals that an increase in daily household calorie intake is proportional to the
increase in income of the household.

Ecker and Qaim (2008) in Malawi use a parametric demand systems for estimating the study on
nutritional elasticity based on a consumer demand. The findings of the study showed that there is
a potential non-linearity between food consumption and income for poor households.
Nevertheless, in developing countries noted a caloric intake and income are positively related to
each other and the elasticity will decline to zero or even to negative value since the levels of
income increases.

Abdulai and Aubert (2004) in Tanzania, they investigate the relationship of the calorie intake and
the income through a non-parametric specification, and showing that the shape of the logarithm
of the caloric-expenditure curve does not indicate any nonlinearity. But in the finding reveals
that there is a linearity in the association between the log of calories prices and log of per capita
expenditure, that is as the higher per capita expenditures as the higher caloric prices or increases.
So that Abdulai and Aubert (2004) provides alternatives to the non-parametric specification of
the caloric intake on food demand and the specification does not consider difference in
households scales because of the variation of the shape of the caloric consumption curve due to
different household size.

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Leyaro et al. (2009), use the panel data to estimate the demand systems by employing the
QUAIDS model to be estimated parametrically to the study of the effects of the rise in food price
on welfare changes in Tanzania. In addition, with a prior functional form specification and
principle aggregate in the demand estimation on both consumed and self-produced food. So that
the short-term and long-term effects of food prices on household welfare changes were
undermined through the aggregation, due to the producers are more likely to maximize their
profit function while the consumers prefer to maximize utility.

2.4 Summary of the Review and Perceived Knowledge Gap

Various functional forms have been used in expenditure analysis studies, but the most commonly
models are linear expenditure and translog functions of the Almost Ideal Demand System
(AIDS) model (Deaton and Muellbauer, 1980). Lau and Mitchell (1971) proposed a “linear
translog” (LTL) form obtained by introducing “committed quantities” into the homogenous
translog function. Pollack and Wales (1981) further expand the idea of pre-committed quantities
in dual analysis and in demand system specifications. So that, decisions regarding the form of the
demand systems are crucial in qualifying the impacts of shocks related to income and prices.
Because of structural differences households were grouped into rural and urban areas and their
expenditure systems are compared, particularly, the impact of precommitted quantities on
expenditure share, as well as cross and own-price demand elasticity. Recently, for estimating the
household food expenditure share in Tanzania, GTL model is very useful for estimations because
it is flexible form and gives good results compared to other models. Also the advantage of this
specification is that it is possible to assess the degree of market-orientation between rural and
urban households.

Thus, this study suggest that non-parametric specifications of share of the food expenditure and

other households characteristics in developing countries, is an important step in availing

selection of the demand model.

15
2.5 Conceptual framework
From the conceptual framework involves dependent and independent variables guiding the study
are interrelated and the concepts in the framework are organized in a manner that makes them
easy to communicate to readers. The framework of this study summarized as follow; the
independent variables involves total households expenditures, quarter time factor and regional,
and demographic factors such as age, sex, marital status, educational level and occupations status
of the head of households. Also the dependent variable will be the share of the total household
expenditures in specific group or sub-item.

Total
Household
Expenditures

1. Occupation
status
2. Age Share of the
3. Education level Total
4. Gender
Expenditures
1. Quarter time
5. Land ownership trend
6. Land size 2. Regional

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Figure 2.2: Conceptual framework of the study

CHAPTER THREE

METHODOLOGY

3.0 Introduction
This chapter describes the methodological and techniques that were used by researcher during
the study to answer the desired objectives. This include the area of study, research design,
sampling and sampling techniques, sample size, data collection methods, data presentation
methods and data analysis techniques.

3.1 Research Design

Creswell (2003), defines a research design as the scheme, outline or plan that is used to generate
answers to research problems. Kothari (2004), notes that a design includes an outline of what the
researcher was doing from writing the hypothesis and its operational implications to the final
analysis of data. In this study, a complex survey design is employed in which secondary data
from National Panel Survey (TZNPS) will be used. Also quantitative analysis for non-parametric
approach and empirical evidences will helps to answer the research objectives in order to avoid
incorrect inferences and policy recommendations.

3.2 Study Area

This study was conducted in United Republic of Tanzania. Geographically it located in East
Africa, covers about 947300 square km and has 51.82 inhabitants (World Bank, 2015). The
majority of the Tanzanian population lives in rural areas and 80% of the poor in Tanzania derive
their livelihoods (A. Ellis et al., 2007). The backbone of economic activity was agriculture and
majority of the agricultural products are consumed domestically as well as rural small-farmers
produce mainly for their own consumption. This study conducted in whole Tanzania because of
the study design was survey and it employee secondary data from national panel survey data, so

17
there is needed large sample size to for making better estimates and inference to the problem of
the study. Also study was concern on urban and rural majority of Tanzania.

Figure 3.1 – MAP OF UNITED REPUBLIC OF TANZANIA

18
3.3 Data source

3.3.1 Tanzania National Panel Survey

In this study, a secondary data of the Tanzania National Panel Survey (TZNPS) will be
employed. National Panel Survey is a national representative household survey that collects
information on the living standards of the population, and non-farm income generating activities,
survey was implemented by National Bureau of Statistics of United Republic of Tanzania (NBS).
The survey carried out into several rounds in such a way that, the first wave were collected
between October 2008 and October 2009, the second wave were carried between October 2010
and November 2011, the third wave was taken between October 2013 and November 2014 and
the fourth wave were collected between October 2014 and November 2015. Through structured
questionnaires of household, community, agriculture and livestock, the data of household and
individual level were obtained by person-to-person interviews.

3.4 Sample Design and Size

3.4.1 Sample Design

Sampling refers to the process of selecting an individual or elements to participate in a given study
(Fraenkel and Wallen, 2000). Through the stratified and multi-stage cluster sampling design was
employed in NPS in order to generate nationally representative samples. Also sample frame of the all
populated enumeration area in the country, are constructed based on the National Master Sampling Frame
originated from the population and housing census of 2002. The sample design of NPS first was divided
in four analytical strata such as Dar es salaam, other urban in mainland, rural areas in mainland and
Zanzibar in which clusters are selected randomly with the probability of selection proportional to their
population size. Also the 8 households were selected in each cluster in the last stage equivalents to census
enumeration area and villages.

3.4.2 Sample Size

Sample size refers to the total number of items selected from the population of interest to
constitute a sample. In this study, a sample size should be large enough to make inference about
the problem investigated, so that suggest to use sample size obtained from NPS across all rounds.

19
In first round about 3264 households were collected in which sub-sample were drawn from Household
Budget Survey (HBS, 2007). The second, third and fourth wave of the NPS have a sample size of the
3924, 5015 and 3,352 households drawn respectively. Also the sample size was refreshed in both round.

3.5 Data Analysis and Technique

Data analysis is the process that involves editing, coding, classifying and tabulating the collected
data Kothari (2004). Statistical packages (R Programming and STATA version 15) will be used
in data analysis begun to code by giving numerical or other symbols to answer the responses as
the pre-step in analysis where by the data were transformed into another format that programmer
can understand.
In this study the both quantitative and qualitative methods for analysis will be employed in

which descriptive statistics, econometric models for estimation and model specification would be

employed as well as weak separability assumption in demand system equation. The non-

parametric specification based will be used on multivariate regression for estimations food share

expenditures patterns, weight and unweight estimations will be included in the study analysis.

3.5.1 Descriptive statistics

The first stage of analysis was descriptive analysis in order to understand the basic features and
behaviors of the population of the study. The summary of the data was given through central
tendency measures.

3.5.2 Model Specification

In this study, two stage budgeting approach will employed to investigate the assumption of the
weakly separability between food and non-food groups consumption in rural Tanzania.

20
According to Deaton & Muellbauer, 1980 if the food assumed to be weakly separable from non-
food that mean the consumers’ utility maximization decision can be decomposed into several
budget stages procedures. In the first stage, this study employee the Working Lesser model or
functional form in the first stage of the demand system for estimating the elasticity for food by
including two broad group of goods named as food and non-food items. The main reason was to
reduce heteroscedasticity in estimation, so that leads for taking a budget share form for the
dependent variables in the model.
According to this study, an estimator requires a large data set and in order to avoid some
problems such as bias and curse of dimensionality the following specification (Robinson, 1988)
double residual semi-parametric estimator will be will be used to estimate the relationship
between response variable (Household food expenditure share) and the explanatory variable as
follows;

Model I
W i =α 0+ α 1 log ( Ei ) + ∑ log(γ ¿ ¿ ik H k )+∑ λ Dk +¿ ε i ¿ ¿

Where;
W i = The share of total expenditures allocated to ith commodity.
Ei = The total/level of household expenditures included on non-parametric side.
H k =¿ The vector of the demographic variables (land ownership, occupation status,
education level, gender) that included in parametric side.
Dk =¿ The dummies variables for quarter time trend and regional.
ε i = The random error term
α 0 , α 1 , β 0 , β1 , γ i∧λ i = Estimated coefficients of the response (dependent) variable.
Also, the expenditure share of the food in the household will be calculated as;

N
W i =X i P i / ∑ X i Pi
i =1

Furthermore, from the equation 1 above, the uncompensated price elasticities and expenditure

elasticities can be derived as follow;

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3.6 Uncompensated Price Elasticities

[ ]
4 4
y ¿ γ ij + ∑ γ ij pij c ij −w ¿ y ¿ ∑ γ ij
1
e ij = − p j c j ( w )¿ + 4
j=1
4 4
i=1
wi γ
∑ α i+∑ ∑ γ ij ln p j
i=1 i=1 j=1

3.7 Expenditures Elasticities

Expenditures elasticity were calculated from parameter estimates of the model as follows,

[ ]
4

∑ PiCi
( )
4
−Pi Ci ¿ i =1
+( w ) + −∑ γ ij
1 y y j=1
e ij =1+
Wi 4 4 4

∑ ∝i +∑ ∑ γij ln P j
i=1 i=1 j=1

In regard to this study the Quadratic Almost Ideal Demand System (QUAIDS) developed by Banks et al.,

(1997) will be used in the second stage of budgeting for demand system. An important for using QUAIDS

model are, first it was non-linear Engel function and second is flexible functional form. The QUAIDS

model in this study will be as follow;

W i =α i + j =1nγ ij ln pj+ β i ln Xa (P)+ λ i bP ( ln XaP ) 2+ μi

Where by,

W i = The share of total expenditures allocated to ith goods.

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 p j = The price of jth goods.

X =¿ The household expenditure on goods in the system.

a (P)=¿ The price index.

Also 1 nγ ij , β i∧ λiare parameters to be estimated and μi is a random error term. Since there is

endogeneity problem that may arise due to the expenditures are endogenous variables, so in this

study the use of instrumental variable will be employed like as proposed earlier by Blundell and

Robin (1999).

3.8 RAMSEY Reset Test

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 CHAPTER FOUR

FINDINGS, RESULTS AND DISCUSSION

4.0 Introduction
This chapter present analysis of the findings and discussion of the results obtained from the study
which aim at the examining whether the food consumption is weakly separable from other
consumption goods by using employing a non-parametric approach. The chapter begins by
presenting the descriptive statistics for socio-economic variables through tables and graphical
presentations, and the rest of the chapter was based on findings to answer the research questions
of the study.

4.1 Socio-economic and Demographic Characteristics of Households

In this study, the socio-economic characteristics of respondents examined were age, level of
education, occupation, place and income per month. The purpose of choosing these
characteristics was to study the characteristics or the nature of the population being studied.

4.1.1 Population Distribution of the Household Head by Age

Findings from the study show that head of household respondents were between the ages below

35 years were 2124 (30.97%). Age 20- 40 constituted 43.7% of all head of household’s

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respondents, 40-60 years constituted 36.76% of all head of the household’s age, 60-80 years

constituted 16.17% of all respondent, while the age above 80 years constituted 2.36% of all head

of household. Thus, the results imply that majority of head of households that interviewed from

NPS data were lying between 40 - 60 years showing that most of them were more active and

younger, that population would be more engaged in economic activities and provides a basic

need to dependent population. While the dependent population in this study were determined

that there is low frequency of the dependent’s population in which below 20 years were 125 and

older (above 80 years) head of households were 290 in all population of the study.

Table 4.1: Percentages Distribution of the Head of Households by Age (n = 6,859)

Age Distribution Frequency Percent (%) Cum

Below 35 years 2,124 30.97 30.97
35 - 49 years 2,222 32.4 63.36
50 - 64 years 1,544 22.51 85.87
65 & Over years 969 14.13 100
Total 6,859 100
Source: Author computation using STATA 15

4.1.2 Percentage Distribution of the Household’s Head by Age and Sex (NPS, 2012 - 2014)
From the figure 4.1 below, the finding shows that most of the male-headed household aged
between 20 up to 40 years, while the female-headed households were lower percentage
distribution across all age distribution. That means that most of the household head were male
and have higher age than female-head of households, as on aged between 20-40 years male-head
of household were 3,184 with more than 30% and the female-households head were 765. Also,
this finding supported by the figure 4.3 below show visualize of the sex distribution across all
age composition.

Figure 4.1: Percentage Distribution of Household Head by Age with Sex (NPS, 2012 – 2014)

Source: Author, Computation by using STATA 15 (2020)

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4.1.3 Distribution of Households Head by Sex and Place of Residence

The findings from the Table 4.1.2 show that male-headed households have high percent than

female-headed households in Tanzania where by 6,669 (73.75%) of head of households were

male and the rest of them with 2,374 (26.25%) were female. The reason for this study wanted to

compare the role of male and female in leadership role and whose is most involved to fulfill

family duties by providing basic needs to the household, due to the fact that most male in were

more involved in heading most of the family.

Figures 4.2: Distribution of the Household Head by Sex and Place of Residence for 2 NPS

Rounds (2012/13 and 2014/15), Tanzania

NPS 2012/13 NPS 2014/15

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 frequency
frequency
2,500

2,000

1,500

1,000

400

300

200

100
500

0
0
2392 383
367

1283

762 118 121

446

Rural Urban Rural Urban

Source: Author’s computation by using STATA 15.

4.1.4 Distribution of the Households Head by Education levels

Education is always valued as the means of liberation from ignorance and enables one to perform

effectively the economic activities. The respondents were asked to state their levels of education

which ranged from primary education to master’s education. It was then observed that the

majority of the respondents 4425(38.39%) had attained primary education and about

3,685(31.97%) of the respondents interviewed had not attended any level of education as the

results summarized in Table 4.3 below. The rest 5.65 %, 4.45% of the respondents had attained

secondary or higher and masters. The results from the research indicated that, as the result of

most of the respondents being in the level of education is higher compared for those who does

have education.

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Table 4.3: Percentages Distribution of the Head of Households by Education Level

4.1.5 Percentages Distribution of the Household Head by Occupation status

In this study, respondents were asked to mention their occupation that earns them income and
their responses are summarized in Table 4 below. The results revealed that 2,068(55.37%) of the
head of households depended on agriculture and livestock keeping as a source of their income.
However, 732(5.6%) get their income government employment activity, 1586(12.13%) were
private employee and only 213(1.63%) were jobless. Also, these results indicate that the majority
of head of households in Tanzania were engaging in agricultural and livestock keeping, means
the most of the people were farmers and we can conclude that agriculture were the backbone of
the economic activity in our country.

Table 4.5: Occupation status of the head of household (n = 13,073)

Main Occupation Status Frequency Percent (%) Cum Frequency

AGRICULTURE/ LIVESTOCK 3,599 52.66 52.66
FISHING 82 1.2 53.86
MINING 32 0.47 54.33
TOURISM 1 0.01 54.35
GOVERNMENT 381 5.58 59.92
PARASTATAL 26 0.38 60.3
PRIVATE SECTOR 983 14.38 74.69
NGO/RELIGIOUS 54 0.79 75.48
WITH EMPLOYEES 201 2.94 78.42
WITHOUT EMPLOYEES 1,089 15.94 94.35
UNPAID FAMILY WORK 62 0.91 95.26
PAID FAMILY WORK 1 0.01 95.27

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 JOB SEEKERS 10 0.15 95.42
STUDENT 19 0.28 95.7
DISABLED 186 2.72 98.42
NO JOB 108 1.58 100
Total 6,834 100
Source: Author computation by using STATA 15

4.1.2 Trends of the Share of The Households Expenditures

4.2 EMPERICAL RESULTS

4.2.1 Estimation of the Parameters
In the present section we estimate the functional form of the demand system using a
nonparametric specification. We investigate the functional form of the budget share for the
aggregate consumption. The general idea is testing whether the shape of the food share is linear
or alternatively non-linear. So that an estimation of the model 1 and the results are indicated as
follows in Table 4.7 and figure 4.7. The regression analysis confirmed the Working-Leser model.
We obtained have a negative sign for total expenditure coefficient to the share of the food
consumption. In contrast the factors such as age and household size have the positive
relationship to this share.
This results were supported by study of Hanan Dudek, who conduct a study on the quantitative
analysis on food expenditure in Poland, he get same results as household size have a positive
sign to the food expenditure share while total expenditure have a negative sign to the food
expenditure shares.

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