The data set used in Exercise 5.3 is used again. This time it is used to estimate how the proportion of the household budget spent on transportation WTRANS depends on the log of total expenditure ln(TOTEXP), AGE, and number of children NK. The output is reported in Table 5.7.

(a) Write out the estimated equation in the standard reporting format with standard errors below the coefficient estimates.

(b) Interpret the estimates b2, b3, and b4. Do you think the results make sense from an economic or logical point of view?

(c) Are there any variables that you might exclude from the equation? Why?

(d) What proportion of variation in the budget proportion allocated to transport is explained by this equation?

(e) Predict the proportion of a budget that will be spent on transportation, for both one- and two-children households, when total expenditure and age are set at their sample means, which are 98.7 and 36, respectively.