Question: Note 8 to this chapter, which refers to the section on "Determinants of the crude birth rate," and the accompanying discussion in that section, argue that the inverse relation between per capita income and crude death rates is much weaker than the inverse relation between per capita income and crude birth rates shown in Table 12.2. A simple econometric exercise can test these two hypotheses. Using Excel, and beginning in cell A1, create a spreadsheet like the following, using data from the World Bank website (www.worldbank.org; look under "Data and Research" then "Data by Topic') or some other source. Input data for eight countries on their CBR, CDR and income (either GNI or GDP) per capita for a recent year in the corresponding columns. Try to choose countries from different parts of the world. (If you do not have access to Excel or some other spreadsheet program, draw two scatter diagrams for the data and fit, by hand, the best straight line to the data.)
a You are first going to draw two scatter diagrams (choose the one with no line!). The first will have the crude birth rate as the dependent variable shown on the vertical axis and income per capita as the independent variable on the horizontal axis. The second scatter diagram (with no line) should have the CDR on the vertical axis and income again on the horizontal.
b Right click on one of the data points in each graph and then have Excel "add trendline" (choose linear) and under "Options," display the equation and R-squared.
c What were the expected signs on the per capita income variable in each equation? Do the coefficients on income have the expected signs in your regression results?
d How "good" is income in explaining what happens to crude birth and crude death rates, at least according to the R2 values you obtained for your limited sample?
