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In the second stage of Deaton model estimation, we use the estimates from the first stage and remove the effects of the total household expenditure and other household characteristics from the budget shares and the unit values (ie, purging the quality effects): (3) (4) The dependent variables ( and ) in equations (3) and (4) contain the price information and we use it to create cluster averages of budget shares and unit values: (5) (6) After creating averages of budget shares and unit values on the cluster level, we can calculate how cluster-level demand (ie, cluster budget shares) responds to changes in cluster-level unit values