The relationship between household consumption expenditure and various factors

Authors

• Maire Honkanen Department of Household Economics, University of Helsinki

DOI: https://doi.org/10.23986/afsci.71691

Abstract

The purpose of this study has been to elucidate the relationship between various factors and household consumption expenditure. The data, collected by households, are from the rural consumption investigation carried out in 1959/60. The data were studied in two separate groups, farming households and wage-earner households. The research unit was a household. The seven different expenditure groups (tables 1 and 2) were studied in detail and the variations in their share of the total expenditure were studied by stepwise regression analysis. The equations developed for studying the monetary consumption expenditure are given in tables 3 and 4. It is notable that the third degree function of the expenditure class rise gave the best explanation for the variations in some expense groups for all these households. Of the variations in the other expenditure group for the wage earners, almost a half were determined by the parabolic function of the increase in expenditure alone. In explaining the variations in the different expenditure groups, the models given in tables 3 and 4 proved somewhat more efficient than the original models (tables 1 and 2). It must be kept in mind, however, that the data on many of the expenditure groups were rather limited in both an absolute and a relative sense. Regularities that would explain the expenditure variations were not provided by the independent variables for all relationships. It should also be kept in mind that the results are based on data from each household for consumption expenditure for a period of one month. The available data also imposed certain restrictions on the variables tested for their relationships with the consumption expenditure.