REGRESSION ANALYSIS OF EXPENDITURE ON MONTHLY INCOME AND FAMILY SIZE

REGRESSION ANALYSIS OF EXPENDITURE ON MONTHLY INCOME AND FAMILY SIZE (A CASE STUDY OF MEDICAL LAB SCIENTIST IN UNIVERSITY OF UYO TEACHING HOSPITAL)

CHAPTER ONE

GENERAL INTRODUCTION

• Preliminary

Economic development of any nation is contingent upon the income potential and consumption patter of its people. While, the channelization of income in productive investment avenues leads to increased capital formation, the rise in consumption expenditure leads to higher aggregate demand and elevated economic growth of a country (Dwivedi, 2005). Since, industrial workforce are both potent consumers and prospective savers of economy, it becomes all the more important to analysis their savings consumption expenses. Of the multiple factors determining the income and subsequent consumption pattern of the individual, the family or the household size assumes importance (Browning and Lusaidi, 1996; Orbeta, 2006).

Most of the existing studies are of the view that family size affects both the income and consumption expenses of the individual, but in opposing direction (Rehmen et al., 2010). With increase in the size of the household, the income is diverted away from the savings and consequently, the saving income-ratio of the individual is lowered. However, because of the presence of relatively large number of economically active members, there is a possibility of average saving of large sized families being more than that of the law member family groups. Nevertheless, the empirical findings of majority of studies suggest that family size has a negative effect on saving, as increased number of family members draw down the savings, thereby resulting in reduced propensity to save of an individual (Bendig et al., 2009) consumption expenditure, on the other hand is regarded as a positive function of household size as proposed by a number of consumption theories. Every addition to the family size result in incremental burden on the current income levels of the household which leads to the diversion of income towards consumption (Dornbush et al., 2004) and the gratification of day to day consumption needs of the additional income ratios of the individual. Some researchers are of the view that in absolute terms, the consumption expenses of the large families can be lower than that of the small member families, which may be possible due to the relatively lower income levels of large households in contract to the smaller ones. However, the effect of family size on consumption expenditure in real terms is assessed through examining the pattern of proportion of income spent on consumption (consumption income ratios) in response to increase in number of members in a family. A number of studies unanimously agree that existence of additional family members in a household result in increased prosperity to consume, thereby implying that consumption expenses are positively impacted by the family size (Kelly, 2015).

There exist limited studies which have exclusively studied the effect of family size on both saving and consumption expenses of the industrial workforce. Therefore, in this backdrop, the present study attempts to fill existing research lacunae through in-depth examination of the impact of family size on monthly saving and consumption expenditure of through the application of specific econometric tools. It further aims to study the pattern of income and consumption expenses of workers by simultaneously analyzing and comparing their mean values across different family size groups.

• Objective of the Study