On The Modeling of District Policy Effects to Household Expenditure: A Hierarchical Bayesian Approach

Household data such as household expenditure data are widely used as a basis for policy decision making. Since Household data is often view as hierarchical structured data, with household nested in its district of residence area, both the district condition and its households influence each other. In this case, it is important to have contextual analysis to model the significance of district policy impacts to household expenditure. This paper proposes to develop a model for analyzing district policy effects to household expenditure by using a hierarchical Bayesian approach. The model is developed by taking into account household and district characteristics as a reflection of government policy at district level. The result shows that district policy in the economic, health, education and housing facilities do affect to household expenditure through its household characteristics.