THE MISSING INCOME PROBLEM IN THE ANALYSES OF ENGEL FUNCTIONS

The empirical evidence from the extant literature in demand analysis points to the importance of income in food expenditure relationships. However, roughly 30 percent of all households in the 1977-78 Nationwide Food Consumption Survey do not report income figures. The focus of this paper is on the missing income problem in analyses of Engel functions. This analysis statistically links particular demographic attributes in affecting the probability of reporting income information. Additionally, several techniques to overcome the missing income problem, namely, regression imputation, the Heckman procedure, and item deletion, are discussed. Empirical evidence suggests that the Heckman procedure is statistically superior to item deletion, and that regression imputation and the Heckman procedure yield similar results.