A Microeconometric Analysis of Household Consumption Expenditure Determinants in Yam-growing Areas of Nigeria and Ghana

Abstract

This paper provides an analysis of microeconomic factors that explain household consumption expenditure in rural areas using cross-sectional data obtained from 1,400 randomly selected yam-producing households of Nigeria and Ghana. The correlates of consumption expenditure were examined using two techniques: ordinary least squares (OLS) and a quantile regression (QR) approach for a more comprehensive picture at different points of the distribution. Determinants of consumption expenditure are markedly different between the regressions and across the conditional quantiles of the expenditure in both countries. Results further indicate that age, education, and household size were important in explaining consumption expenditure using OLS. However, via conditional QR, the following additional factors became evident: membership of formal and informal institutions, main occupation, family structure, and farm size. Only education was consistently significant in both regressions and across the conditional quantiles, suggesting that responses to investments in education lead to increase in expenditure that will stimulate other sectors of the economy