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Income, expenditure and savings are interrelated. The expenditure incurred on the various needs is vital to enhance the health status and welfare of households. On the other hand, savings are essential for future use. According to the theory of consumption, consumption patterns vary according to income levels of households; higher income household tends to allocate smaller percentage for daily needs such as food and clothing and higher spending on luxury goods The percentage of.saving is low at low income levels, increased as income increased and then decreased again when the income continues to grow. This paper aims to analyze the relationship between income, expenditure and savings of households in Peninsular Malaysia. The analysis is based on 4003 households interviewed in the year 2007/2008. The sampling frame is the number of households in Peninsular Malaysia and the sample was selected using the proportionate stratified sampling method according to the percentage of households in each state in Peninsular Malaysia. The analysis indicated that the elasticity of income-expenditure is highest for rental expenses and loan payments, as well as health, while the lowest elasticity was recorded for daily needs. This implies that a majority of household expenditures are allocated to rental and loan payments and healthcare expenses when there is an increase in income. In terms of saving, most households allocate only a small proportion of their income for savings, while there are some households without any savings and some even spend more than their income.
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ffi lvlalaysian Journol Of Consumer And Family
THE RELATIONSHIP BETWEEN
INCOME,
BXPENDITURE
AND HOUSEHOLD
SAVINGS IN PENII\SULAR MALAYSIA
Rahmah Ismail
Norlinda Tendot Abu Bakar
Universiti Kebangsaan Malaysia
Abstract
Income, expenditure and savings are
interrelated. The expenditure incurred on
the various needs is vital to enhance the
health status and welfare of households.
On the other hand, savings are essential
for future use. According to the theory of
consumpfion, consumptton patterns vary
according to income levels of households:
higher income household
tends to allocate
smaller
percentage
for daily needs
such as
food and clothing and higher spending on
luxury goods The percentage ofsaving is
low at low income levels, increased as
income increased and then decreased
again when the income confinues to grow.
This
paper aims to analyze the relationship
befween
income, expenditure and savings
of households
in Peninsular Malaysia. The
analysis is based on 4003 households
interviewed in the year 2007/2008. The
sampling frame ls the number of
households in Peninsular Malaysia and
the sample was selected using the
proportionate stratified sampling method
according to the
percentage ofhouseholds
in each state in Peninsular Malaysia. The
analysis indicated that the elasticity of
income-expenditure
is highest for rental
expenses and loan payments, as well as
health, while the lowest elasticity was
recorded for daily needs. This implies that
a majority of household expenditures
are
allocated to rental and loan
payments
healthcare expenses when tltere is
increase in income. In terms of
most households allocate onlv a
proportion of their income
for
while there ore some households
wi
any savings and some even spend
thon their income.
Keywords: income, expediture,
sovings,
household
Introduction
According to a report published
by
Economic Planning Unit (2007)
average household income in Malaysia
increased
from RM 3,249 per
month
i
2004
to RM3,686 per
month in 2007.
The
average
household income in urban
had increased by a larger amount
RM4,356 per month in 2007 compared
RM3,956
per
month
in 2004. The
income
of rural households
also
increased
from RM2,69l per month in 2004
to
RM2,283
in 2007. In the
same
period,
the
averaqe household income of Bumi
rose
by 5.2 per cent to RM3, 156
month, while the Chinese
households had
their income increased
by 3.0 per
cent to
RM4, 853 and Indian households
experienced income improvement
al a ralc,
of 3.2 per cent to RM3, 799 in yeu 2007
(Malaysia
2008).
168
The Relationship behreen lnconre. Expenditue and Household Sartugs in Peninsular .l{alarsia
The increase in average
household
in Malaysia should not be
as an indicator that allows for
ted spending.
It is only a parameter
the economic status of the household.
ld spending on the other hand
the pattern of consumption as
as household savings. Expenditure
consumption are interrelated.
iture is the amount of income
for the purchase
of goods or
while the consumption can be
as the expenses
for the goods or
that are typically used by
(Hendrerson
& Pole, l99l).
ion can be divided into several
ies, namely,
consumer services,
r durables and non-durable
soods
addition, the total expenditure and
mnsumption varies according to strata,
uban and rural areas,
gender of the head
f household,
age, number of household
nembers, types of expenditure and
tousehold
income (Fabiosa & Soliman
1008; Ong & Tee 2004; Phipps
& Burton
1998;Rogers
1988; Xu & Ravindal
2007).
lowever, many researchers failed to
btermine the relationship between family
ize
and
family expenses
(Forsyth
1960).
This paper aims to discuss the
llationship
between expenditure as well
s savings and households income in
bninsular
Malaysia. The analysis was
ased on 4003 household
data which was
ollected
in200712008. Besides,
this paper
iscusses the influences of income on a
urge of household spendings, including
lucation.
health.
utilities and rent.
Household Income in Malaysia
The problem of unequal growth and
income
distribution have
existed ever since
independence
until now despite the various
policies that have been developed and
implemented. Although economic growth
has improved following the various efforts
undertaken, the issue of imbalanced
income distribution remains a major
concem of many parties.
For example,
the
income share of the lowest 40 per cent of
households
declined
from 14.0
per cent in
1999
to 13.5 per cent in 2004.
While the
top 20 per cent of households, its share
rose from 50.5 per cent to 51.2 per cent
(Malaysia
2006)
Average monthly household
income of Malaysia by state is shown in
Table 1. In 1990, the highest monthly
average income was in the Federal
Tenitory of Kuala Lumpur at RMl, 823
per month followed by Selangor
(RMl,
658 per month) and the lowest was in
Kelantan,
which was
RM7l2 per
month. In
2002, the Federal Territory of Kuala
Lumpur had the highest
average
household
income averaging at RM4, 930.00,
followed by RM4, 406.00 in Selangor,
Penang RM3, 496 and Johor RM2, 963.
The average household income is the
highest in the Federal Territory of Kuala
Lumpur because Kuala Lumpur is the
capital and centre of economic growth.
These statistics clearly indicate the
disequilibrium in income distribution
between the states
in Malavsia.
169
mMalaysian Journal Of Con,sumer And Family Economics
Table L: Average Household Monthly Income by State
State Average Monthly Income (RM)
1990 1995 2002
Iohor 1.t52 2,r38 2.963
Kedah 749 t,295 1,966
Kelantan 7t2 1,091 t,6'74
Melaka 1,084 1,843 2,650
State Sembilan 1.083 r,'76',7 2,739
Pahang 96r r,436 r,991
Perak 9',73 1,436 2,t53
Perlis 8t'7 1.158 2,006
Pulau Pinane r,326 ')')")\ 3.496
Sabah
(termasuk
Wilavah
Persekutuan Labuan) r.266 t.647 2.406
Sarawak l, l9l 1,886 2,5t5
Selansor 1,658 3.162 4.406
Terenssanu '759 t.ltj 1,83',7
Wilavah
Persekutuan
Kuala Laumour t.823 3.371 4.930
Source : Malaysia
2005
The overall average monthly
household income was RM2, 472 in 1999
and RM3, 249 in 2A04 at current prices.
The average annual growth rate for the
average household income between the
period at current
prices was 5.6 per cent
while it was 4.1 per cent at the constant
prices. Besides, the average household
income in urban and rural areas differs
greatly. For example, the average
household income for urban and rural
areas in 1999
were RM3, 103 and RMl,
718 respectively
at current prices. This
number increased
to RM3, 956 and RMl,
875 respectively for urban and rural areas
(see
Table 2).
Meanwhile,the income distribution
in Malaysia can also be observed
by ethnic
and strata. Table 2 indicates that the
household income of Bumiputera
increased from RMl, 984 per month
in
1999 to RM2, 711 in 2004 at cunent
prices. The percentage average annual
growth between the years 2000-2004
ww
recorded at 6.4 percent. Meanwhile,
in
constant
price with 1999 as the base
year,
the average gross household income
per
month for the Bumiputera was RMl, 984
in 1999 and RNIZ, 522 in 2004. The
Chinese ethnic group has a higher aver:age
household income compared to the other
ethnic groups. While other ethnic group
had the highest
average
annual
growth rate
of I1.0 per cent at current
prices
and
9.4
percent in constantprices
i999.
r70
The Relationship between Income, Expenditure and Household Savings in Peninsular Malaysia
Table 2: Average Monthly Household Income
by Ethnic Group and Strata
Ethnic
Group
and Strata
At Current
Price
(RM) Average
Anual
Growth Rate
(yo)2ooo-
2004
At Constant
Price
ofYear 1999
(RM)
Average
Anual
Growth
Rate
(yo)2000-
2004
t999 2004 1999 2004
Bumiputera r,984 2,7II 6.4 1,984 ) \)) 4.9
Chinese 3,456 4.437 5.1 3.456 4,127 3.6
Indian 2,702 3,456 5.0 2,702 3,2r5 3.5
Others r,371 2,312 11.0 r,371 2,r50 9.4
MALAYSIA 2,472 3,249 5.6 2,472 3,O22 4.t
Urban 3,103 3,956 5.0 3,103 3,680 3.5
Rural 1,718 1,875 1.8 1,718 1,744 0.3
Source: Ivlalaysia 2008
usehold
Expenditure in Malaysia
average monthly household
is shown in Table 3. The
ibution
of expenditure is based on the
I expenditure categories, namely, food
non-alcoholic
beverages:, alcoholic
and tobacco; clothing and
housing,
water, electricity,
gas
rvE.'uvSv..rb''!*w^,
other fuels; furnishings,
household
uipment and maintenance; health,
communications; recreation
rvices
and culture;
restaurants
and
hotels
well as miscellaneous
goods and
rvices. The total average monthly
expenditure increased from
I, 161 n 199311994
to about
RM2,
in2004/2005. The same applies to the
rage household
expenditure
in urban
rural areas.
The total expenditure
for
areas
increased
by RM342 in the
2004/2005
when comoared to the vear
. While in rural areas, the average
expenditure only increased by
RM31 in the year
200412005
compared to
1998/1990.
It can be seen that a large
proportion
of expenditure was spent on
foods and non-alcoholic beverages with
the increasing amount of RM276 per
month in 1993/94
to RM393 in the year
200412005. Expenditure on housing,
water,
electricity,
gas and other fuels also takes
up the second largest percentage
of
expenditures by the Malaysian
households
apart from foods and beverages.
Expenditure
on this group
was
RM245
per
month in 1993/94
and
increased
to RM430
per month in 200412005. Looking at the
stratum, the expenditure
for urban areas
is
higher compared
to rural areas. As shown
in Table 3,
the expenditure
for the
housing,
water, electricity, gas and other fuels
expenses
for urban areas
is higher
than the
expenditure
for foods and non-alcoholic
beverages.
This indicates that a bulk of of
household expenditure is for housing,
water, electricity, gas
and other fuels.
t7l
?qE
tI Malaysran Journal Of Consumer And Family Economtcs
MW
Table 3: Average Monthly Expenditure Per Household
By Stratum
Expenses Group Total
RM @ercentage) Urban
RM @ercentage) Rural
RM @ercentage)
1993t94 1998t99 2004105 1998t99 2004/05 1998t99 2004t0s
Foods andNon-
alchohol beverages 276
(23.7) 368
(22.6) 393
(20.1) 370
(1e.0) 407
(17.8) 366
(28.8) J0)
(28.r)
Alchohol and
cigarrettes 26
(2.3) 30
(1.8) 35
(1.8) 31
(1
6) 38
(1.7) 29
(2
3) 30
(2.3)
Clothines and
footwears 4l
(3.5) 56
(3.4) 59
(3.0) 6l
13. 1) 64
(2.8) 50
(19.4) 48
B.7l
Housing,
water,
electricity,
gas
and
other energy sources
245
(2r.r) 363
(22.3) 430
(22.0) 464
(23.8) 522
(22.8) 246
(re.4) aA1
(1e.0)
Fumiture, Household
Equipments
and
Maintenance
65
(5
7) 84
(s.2) 83
(4.3) 99
(s.l) 97
(4.3) 66
(5
l) )0
(4.3)
Healthcare 2l
(1.8) 29
(1.8) 2',7
(1.4) 36
(1.9) -) -)
(1.4) 20
(1.6) t6
fl.2\
Transportation 168
(14.5) 227
(13.e) 314
(16.1) 268
(13.8) 372
(16.3) 181
(14.3) 200
fl5.4)
Communication 24
(2.r) 59
(3.6) 103
(5.3) (4.0) r28
(5.6) 39
(3.1) ]J
(4.
l)
Recreation
and Cultural
Services 53
(4
6) 70
(4.3) 92
(4.7) 88
(4.5) 115
(s.0) 49
(3
e) 48
(3
7)
Education l7
1.5) 3l
fl.9) 38
(2.0) 44
Q.3) 49
(2.1) 15
t.2'l t6
0.2\
Restaurants and
Hotels 145
02.5\ 209
r12.8) 213
(10.9) 278
fi4.3\ 260
(11.4) 130
(10.2) r20
(e.2)
Goods and Services 78
(6
7) 105
(6.4) t6'7
(8.s) 128
(6.6) 200
(8.8) 79
(6.2) r02
(7.8)
Average Household
Monthly Expenses
(0-
12)
l,16l
(100.0) 1,631
(100.0) 1,953
(100.0) r943
(100.0) 2,285
(100.0) 1r270
(100.0) 1,301
(100.0)
) | (4.s)
| (s0) | r:.s)
| (lzl
II
| ++ | +g I 15 I 16
ll
) | Q.3t I rZ.tt | (1.2)
| (1.2)
ll1
)) | fl4.3)
| (11.4)
| (10
2) | (e2)
l i
I r28 | 2oo | 7e | 102
ll
I I reer
I tssr
I rozr
I rz8)
ll
I
0)
| (100.0)
l(100.0)
l(100.0) l,t*.rll
i
distributed to households through
the
I
enumerators.
The
sampling
frame
is based
I
on
the
number
of households
in Peninsular
I
Malaysia. while the sample
selection
I
adopted
a proportionate
stratified
sampling
I
according to the percentage
of households
I
by state.
Expenses
are
divided
into
five
t
cateqories- namely dailv expenses,
I
j
Source: Department of Statistics
Malaysia 2006, 2007
,2008
Analysis of Income, Expenditures
and Savings:
A Case Study
This section analyse the income,
expenditure and savings based on data
collected
in the
year
2007/2008 from 4003
households in Peninsular Malaysia. The
data
is collected based on questionnaires
t72
fni
till Malaysion Journal Of Consumer And Famil,v Economics
affi
Table 4: Average Monthly Household Expenditure
Expenditure
Category
(RM)
Total
(RM)
Daily
needs Utrllty Rent
& Loan
Payments Healthcare Education
Strata
Urban a1 A1 605
(24.36) 574
(23.11) 819
(32.97) 242
(9.74\ 244
(9.82\ 2484
11m.0)
Rural 1252 494
(31.29) 458
(29.01) 322
(20.39) 141
(8.93) 164
(10.39) 1579
(100.0)
Head of Household
Ivlale 3772 577
(2s.u) 543
(24.32) 676
(30.27) 214
(9.58) 223
(9.99) 2233
(1m.0)
Female 227 458
(27.74) 448
Q7.14) 450
(27.26) 148
(8.96) 147
(8.90) 1651
(100.0)
Ethnicity
Malay 2816 538
(25.73\ 524
(25.06\ 628
(30.03) 181
(8.66) 220
fl0.52) 2091
flm.0)
Chinese 912 685
(26.3r\ 598
(22.96\ 777
(29.84) 318
02.2t) 226
(8.68) 2604
(100.0)
lndian 271 523
(2s.99) 484
(24.06) 652
(32.41) 162
(8.0s) 191
(9.49) 2012
flfn0)
Number of
Household
members
s5 2802 525
(2s.s) 505
(24.s3]l 647
(31.42\ 210
(10.20) 172
(8.35) 2059
fl00-0)
6to
l0 t175 otz
(26.s6) 615
(24.31\ 707
(27.94) 212
(8.38) 521
(9.49\ 2530
alfn0)
>10 22 934
(34.0s) 619
(22.s7\ 402
(14.66)
'tA)
(8.82) 546
(19.91) 2743
(1m.0)
Overall 3999 s7I
Q5.92\ 538
Q4.42\ 664
(30.14) 2ll
(9.58) 219
o.941 2203
fl00.0)
Source: Field Work
200712008
Analysis
of the Household Income of households
in Peninsular Malaysia as
and Expenditure whole. It is shown that the higher d
income level,
the larger percentage
of tl
Table 5 illustrates the distribution of households
at the higher expenditu
average monthly expenditure and income interval.
Table 6 shows the distribution
r
t74
The Relationship between Income. Expenditure and Household Savings in Peninular Malaysia
seholds according to their level of
nditure. income and stratum. In the
n areas, most households have
'me
mnging
from RM5001-7500
and
tof them spend up to RM3001-5, 000.
the other
hand,
people
in rural areas
lower
income
range
of RMl00l-2000
month,
thus their expenses are also
)r compared to the urban areas,
ing from only RM501-1000 per
th. The
distribution of households
by
income, expenses and the stratum
is a clear
reflection of the unequal distribution of
income between urban-rural areas wherein
the percentage
of high-income population
is higher in the urban areas compared to
the percentage in the rural areas. These
differences also reflect the differences in
the spending
power of the urban and rural
households,
ttrus reflecting the differences
in their quality of life.
Table 5: Average Monthly Expenditure and Total Income of Households
Income
(RM)
Exnenses
(RM)
Total
<500 501
t-tno
1,001
2.O(n
2,001
3-O00
3,001
5-OO0
5,001
7500
7,501
to-(n0
>10,001
:1,000 9l
(38.9) 135
(s7.7\ o
(2.6) 0
(0.0) I
(0.4) 1
(0.4) 0
(0.0) 0
(0.0) 234
fl00-0)
,001
- 2,000 53
(8.2) 254
(39.5) 328
(5r.0) 7
(1l) 0
(0.0) I
(0.2) 0
(0.0) 0
(0.0) 643
(100.0)
1,001
- 3,000 24
(3.2\ 143
(l8.9) 501
(66.1
)82
(10.8) 7
(0.9) I
(0.1 0
(0.0) 0
(0.0) 758
(100.0)
|,001
- 4000 1
(0.2\ 54
(8.2\ 375
(56.6) 207
(31.3) z3
(3.5) 2
(0.3) 0
(0.0) 0
(0.0) 662
4100_0\
4,001
- 5,000 2
(0.4) 21
(4.3\ 195
(3e.5) 193
(39.1) 8l
(l6.4) I
(0.2) I
(0.2) 0
(0.0) 494
(100.0)
5,001
-7,500 I
(0.1 14
(2.0\ 142
(20.8) zJz
(34.0) 267
(3e.
l )26
(3.8) I
(0.I 0
(0.0) 683
(100.0)
1,501
-
L0-000 0
r0.0') J
r1.0) 2l
0.2\ 75
(25.7\ 137
46.9\ 51
(17.5\ 4
fl.4') 292
(100.0)
0,001
-
5-000 0
r0.0) 0
r0.0) 8
14.8) 16
(9.6') 64
138.3) 61
136.5) 15
r9.0) J
11.8) 167
(100.0)
'15,001 0
(0.0) 0
(0.0) I
1.5) -1
(4.5) 9
(13.6) a1
(31
.8) l6
(24.2) 16
(24.2) 66
(100.0)
lotal t72
f4 3) 624
(15.61 1577
(39-4\ 8ls
oo.4\ 589
(r4.7\ 165
u.rl JI
r0.9\ 20
(0.5) 3999
fl00.0)
Source: Field
Work 200712008
T75
tr.i
lad ,\lalaysian JoLtrnal Of Co,1
sumer And Family Economics
Table 6: Average Monthly Expenditure and Income of Households
by Strata
URBAN
lncome
(RM)
Expenses
(RM)
Total
<500 501
1,0m
1,001
2,000
2,OOr
3,000
3,001
5.000
5,001
7500
7,501
10,000
>10,001
s1,000 18
(34.6') JZ
(6
l. s) 0
(0.0) 0
(0.0) I
1.9) I
1.9) 0
(0.0) 0
(0.0) {t
r100.0)
I,001
- 2,000 z5
(7.3\ 102
(32.s) 186
(59.2) J
(
1.0) 0
(0.0) 0
(0.0) 0
(0.0) 0
(0.0) 314
1100.0)
2,001
- 3,000 16
(3.1) 86
(r6.7) 349
(67.8) 58
fl 1.3) r1.0) I
(0.2) 0
(0.0) 0
(0.0) 515
(l00.0)
3,001
- 4000 0
(0.0) 3t
(7.6\ 277
(56.5) 157
(32.0) 17
(3.5) z
(04) 0
(0.0) 0
(0.0) 490
(1m.0)
4,001
- 5,000 2
(0.5) l6
(4.1) l5r
(38.8) 156
(40.1) 63
(r6.2) 0
(0.0) (0.3 0
(0.0) 389
flm.0)
5,001
-7,500 0
r0 0) 8
(1.5) 106
(20.0) 182
(34.4) 212
(40.
1) 20
(3.8
)1
(0.2) It
(0.0) 529
(1m.0)
7,501
-
10.000 0
(0.0) I
(0.4) l5
(6.0') 58
(23.3) rz5
(49.4) 47
(
18.9) 4
(1.6) 249
(100.0)
10,001
-
15-000 0
(0.0) 0
(0.0) 6
(3.9) l4
(9.2) 57
(37.5) 5l
(37.5\ 15
(9.9) J
(2.0\ t52
(100.0)
>15,001 0
(0.0) 0
(0.0) 0
(0.0) z.
(3.5) 8
(14.0) t7
(29.8) l5
(26.3\ 15
(26.3\ f,/
fl00.0)
Total 59
0.t\ 282
(10.3) 1090
(69.7\ 630
02.91 486
(l7.Tl 145
(5.3) 36
(1.3) 19
(O.Tl 2747
flm0)
RURAL
s1,000 t5
(40.1') IUJ
(s6.6) o
(3.3) 0
(0.0) 0
(0.0) 0
r0.0) 0
(0.0) 0
(0.0) tn
(100.01
1,001-2,000 30
(9.1) 152
G6.2) 142
(43.2) 4
0.2\ 0
(0.0) 1
(0.3) 0
(0.0) 0
(0.0) n9
(l00.0'l
2,001-3,000 8
(3.3) 57
(23.5) 152
toz.o I 24
(9.9) 2
(0.8) 0
(0.0) 0
(0.0) 0
(0.0) 243
(100.0)
3,001-4000 I
(0.6) t7
(9.9) 98
(57.0) 50
(29.1\ 6
(3.5
)0
(0.0) 0
(0.0) 0
(0.0) 172
fl00.0)
4,001-5,000 0
(0.0) 5
(4.8) 44
(41.9) .I
/15 r\ 18
(l7.1) I
t.0) 0
(0.0) 0
(0.0) 105
(lm.0)
5,00
-7,500 I
(0.6) 6
(3.9) JO
(23.4\ 50
(32.5) 55
(35.7) 6
13.9) 0
(0.0) 0
(0.0) 154
/100.0)
7,501
-
10.000 0
(0.0) 2
(4.7) o
04.0) 17
(39.5) t4
(32.6\ 4
(9.3) 0
(0.0) 0
(0.0) 43
fl00.0)
10,001
-
15.000 0
(0.0) 0
(0.0) 2
(
13.3) 2
(13.3) 7
46.7\ 4
(26.7) 0
(0.0) 0
(0.0) 15
(100.0)
>15,001 0
(0.0) 0
(0.0) I
1l.l I
l1.l) 1
11.1 4
(44.4\ ll.1 1
11.1 9
flm.0\
Total 113
(9.0) 342
07.31 487
(38.9) 185
(14.8) 103
8.2\ 20
(1.6) 1
(0.1) I
(0.1) 1252
(100.0)
Source:
Field Work
200712008
176
The Relationship between Income, Expendihre and Hottsehold Savings in Peninsular Malaysia
7: Average Monthly Expenditure and Income of Households
by Gender of Head of
Household
Female
ri
000
0l - 2,000
0l - 3,000
0l -4000
)l -5,000
11
-7,500
0l-
000
Source:
Field Work 20072008
ffii
ui.t
UEA It'l a I
a1's i
an J o urna I Of Consumer And Familt Economics
Table 7 shows the average
monthly expenditure and income of
households according to the gender of
household head. Most of the male- headed
household have the income ranging from
RM200l-3000
per
month. 67.1
per
cent
of
the household
within this range of income
spend between RM100l-RM2000 per
month. Most of the female- headed
households, however have the same range
of income and expenditure as the male-
headed households.
The shopping behavior
of male-headed
households and female-
headed
households
are not much different.
It is found that households at the low
income range spend at lower level, on the
other hand. at the hieh income levels- the
level of their expenses are higher
regardless
of the sex of their head.
It is found that most Malays
households have income ranging
RM200l-3000 and expenditure
ofl
RMl00l-2000 per month. While mostj
Chinese households having higher incomel
ranges,
up to RM5001-7500
per monthr
spend between RM300l-RM5000 per
month. Indians households,
have income j
and expenditure similar to the Malays,
I
which
are
mostly
at the
range
of RM200l-l
RM3000
and RMl00l-200 per month,!
respectively. This shows that most
!
households expenditure ranges from'
RMl00l to RM2000(see Table 8).
Table 8: Expenditure and Monthly Income of Households
by Ethnicity
Nlalavs
lncome
AIVD
ExDenses (RMl
Total
<500 501
1.000
1,001
2.000
2,001
3 0(n
3,001
5.OOO
5,001
?5(n
7,501
10.000
>10,001
<1,000 79
(40.3) ll0
(56.1
)(2.6\ U
(0.0) I
(0.5) I
(0.5) 0
(0.0) 0
r0.0) t96
100,{
1,001
-
2,000 41
(8.5) 190
(39.2) 246
(50.7) 7
fl.4) 0
(0.0) I0
(0.0) 0
(0.0) 485
2,00r
- 3,000 18
(3.4\ 100
(18.8) 358
67.2\ 53
(9.9) J
(0.6) I
(0.2) 0
(0.0) 0
(0.0) 533
3,001
-4000 0
(0.0) 4-1
(9.4) 265
(58.1) t41
(30.9) 5
fl.1) 2
(0.4) U
(0.0) 0
(0.0) 456
(100,0)
4,001
-5,000 I
(0.3) 17
(4.9\ 153
(44.0) 127
(36.5) 48
fl 3.8) I
(0.3') I
(0.3) 0
(0.0) 34E
flm_0)
5,001
-7,500 I
(0.3) 11
(2.3\ 105
(22.4\ 160
(34.1
)173
(36.9) l8
(3.8) I
(0.2) 0
(0.0) 469
fl00.0)
1,501
-
10,000 U
(0.0) I
(0.5) l5
(8.2) 46
(25.0) 87
(47.3\ -t-t
(17.9) 2
:1.1) (.)
(0.0) 184
(100.0)
10,001
-
15,000 0
r0.0) 0
(0.0) 4
(3.8) 10
(9.4\ 38
(35.8) 44
(41.
s) 9
(8.5) I
(0.9) ltf6
fl00.0)
>15,001 0
(0.0) 0
(0.0) 0
(0.0) -t
(7.7\ 4
(10.3) 12
(30.8) 11
(28.2) 9
IZJ.I 39
(100.0)
Total 140
f5.0) 472
(16.8) 1151
(40.9) s47
(r9.4) 359
(I2.Tl 113
(1.0) 24
(0.9) 10
(0.4) 2816
(100.0)
Chinese
5l,000 l0
(38.
s) l5
67.7\ I
(3.8) 0
(0.0) 0
(0.0) 0
r0.0) 0
(0.0) 0
(0.0) 26
(100.0)
]18
r:
;4,
MW Malaysian,.lournal Of Consumer And Familv Economics
Savings and Household Income
Economic theory predicts
that savings will
increase as income increases. This is
because those with higher income will
have more to save. There is a positive
relation between income and savings
(http://gwbweb.wustl.edu).
In addition, the
level and rate of saving are dependent on
the expected changes in income and also
the amount needed
to live a proper living
(http
: //gwbweb.wustl.edu).
The relationship between the
saving percentage
and monthly household
income is illustrated in Table 9. It is found
that the higher is the income,
the higher
is
the saving of the households.
Overall,
a
total of 1029 or 26.5 per cent of the
households are spending more than their
income. This indicates
these households
are making loans to cover their expenses.
Meanwhile,
another
39 or 1.0
per cent
of
the households do not save, making
the
total of 1068 households
who do not have
savings.
There are 876 or 2.6 per
cent
of
the households have saved from 20.02
to
40.1 per cent of their income, while
another
22.0
per
cent
have
saved from 40.0
to 60.01
per
cent.
Table 9: Savings
percentage
Monthly Gross Household Income Based
on Overalllncome
Income
(RM)
Savings percentage
Total
< -0.01 00.01
20.o
20.01
40.0
40.01
60.0
60.01
80.0
>80.01
:1,000 286
(4e.e) 17
(3
0) 103
(18.0) 96
(16.8) 58
(10.1) 12
(2.r) I
(:0.2) 5'73
(100.0)
1,001
- 2,000 385
(36.6) 12
(l.l) 210
(re.e) 228
(2t.7) 157
(14.e) 51
(s
4) q
(0.4) 1053
(100.0)
2,001
- 3,000 186
(1e.6) A
(0
4) 158
(16.7) 250
(26.4) 252
(26.6) 83
(8.8) 15
(1
6) 948
(100.0)
3,001
-4000 102
(17,6) .J
(0.5) 74
(12.8) 140
(24.r) 182
(31.4) (12.6) 6
(
1.0) 580
(
100.0)
4,001
- 5,000 42
(
13.3) 1
(0
3) 57
(1
8.1
)84
(26.7) 84
(26.7) 45
(14.3) 2
(0
6) 315
(100.0)
5,001
-7,500 24
(
10.1) 2
(0
3) J-l
(13.e) 48
(20.3) 69
(2e.1) 57
(24.1) 4
(1.7) L)l
(100.0)
7,501
- 10,000 2
(2.4) 0
(0
0) 12
(14.1) 18
(2r.2) zo
(30.6) 24
(28.2) 3
(3.5) 85
(100.0)
10,001
- 15,000 2
(3
1) 0
(0
0) 5
(7.7) l0
(1s.4) 17
(26.2) 27
(41.5) +
(6.2) 65
(100.0)
>15,001 0
(0.0) 0
(0
0) 4
(16.7) 2
(8
3) 7
(2e.2) 8
(33.3) J
(t2.s) 24
(100.0)
Total L029
Q6.s) 39
(1.0) 656
(16.e) 876
Q2.6) 852
82.0) 386
(e.e) 42
(r.1) 3880
(100.0)
Source:
Field Work 2007/2008
180
The Relationship between
Income, Expenditure
and Hottsehold Savings
in Peninsular Malaysia
For savings according to the
atum, it is found that in the urban areas,
re are 75.I per cent have saving while
other 24.I per cent have negative
,'ings.
A total of 22 households or 0.8
rcent of households are with zero
rings. Savings ranging from 20.01 to
.0 per cent have the highest number of
households,
which is 23.7 per cent, while
34.3 per cent have savings ranging from
40.0
per cent and below.
Meanwhile in the
rural area,31.9
per cent ofthe households
have loans, 1.4 per cent do not have
savings and the rest have savings mostly
ranging from 40.01 to 60.0 per cent (i.e
250 households)
(see
Table l0).
Table 10: Savings
percentage
by Household Monthly Income and Strata
Urban
Income
(RM)
Savings Dercentage
Total
< -.0.01 00.01
20.0
20.01
40.0
40.01
60.0
60.01
80.0 >80.01
<1.000 105
(s9.7) l0
(5
7\ 24
(13.6) 24
(l3.6) ll
(6.2) I
(0.6) 1
0.6) r76
fltn.0)
1,001
- 2,000 241
(38.3) 5
(0.8) 141
(22.4\ 137
Qr.7\ 7l
(1
1.3) )z
(5.1) -)
(0.5) 630
(100.)
2,001
- 3,000 142
(18.8) 1
(0.1 130
07.2) 207
(27.3\ 201
(26.6) 64
(8.5) 12
(
1.6) 757
,1{n.0)
3,001
-4000 89
(l9.1) -)
(0.6) 58
(12.5) 116
(24.9) t4l
(30.3) 53
(11.4) 5
(l.1) 465
(100.0)
4,001
- 5,000 36
fl3.4) I
(0.4) 53
(19.8) 72
(26.9\ 'tl
(26.5\ -t -)
02.3\ z
(0.7) 268
(1m.0)
5,001
-7,500 24
(11.7) 2
fl.0) 29
(14.1) 47
(22.9\ 58
(28.3\ 43
(21.0) L
(1.0) 205
(100.0)
7,501
- 10,000 2
(2.4\ 0
(0.0) 12
04.6\ 16
(1e.5) 26
(31.7) z-)
(28.0) J
(3.7\ 82
(100.0)
10,00r
- 15,000 2
(J.JI 0
(0.0) 5
(8.2) 10
(16.4) 17
(27.9) 25
(41.0) 2
(3.3) 6l
(1m.0)
>15,001 0
(0.0) U
(0.0) 4
(1e.0) 2
(e.5) o
(28.6) 7
(33.3) 2
(e.s) 2l
(100.0)
Total 641
Q4.r\ 'r',
(0.8) 456
(17.1) 631
Q3.7) 602
Q2.6) 281.
(10.s) 32
(r.2) 2665
(100.0)
Rural
<1,000 l8l
(45.6) 7
(1.8) 79
(1e.e) 72
(1
8.1
)47
(1
1.8) ll
(2.8) 0
(0.0) 397
(1m.0)
1,001
- 2,000 t44
(34.0) 7
(1.7) 69
(16.3) 91
(21.5) 86
(20.3) 25
(5.e) 1
(0.2) 423
(1m.0)
2,001
- 3,000 44
(23.0) -l
(1.6) 28
(r4.7) +5
(22.5) 5l
(26.7) l9
(e.e) J
(1.6) 191
(100.0)
t8t
FA
Ur,i
ME Malaysian Journal Of Consumer And Farnily Economics
Table l0 (Continued)
Rural
3,001
-4000 TJ
(11.3) 0
(0
0) 1.6
(13.e) 24
(20.e) 41
(3s.7) 20
(17.4) 1
(0
e) 115
(100.0)
4,001
-5,000 6
(12.8) 0
(0.0) +
(8.5) 12
r?5 5\ 13
Q7.7) 12 0
(0.0) 47
(100.0)
5,001
-7,500 0
(0
0) 0
(0.0) 4
(12.5) I
(3
1) l1
(34.4) 14
(43.8) 2
(6.2) 32
(100.0)
7,501
- 10,000 0
(0.0) U
(0.0) (.)
(0.0) 2
(66;7) 0
(0.0) I
l.11 3) (.)
(0.0) 3
(100.0)
10,001
- 15,000 0
(0.0) 0
(0.0) 0
(0
0) 0
(0
0) 0
(0.0) 2
(50.0) 2
(s0.0) 4
(100.0)
>15,001 0
(0.0) 0
(0
0) 0
(0
0) 0
(0.0) 1I1
(JJ.J)
J
(100.0)
Total 388
(31.e) T7
(1.4) 2tn
(r6.s) 245
Qo.2) 250
Q0.6) 105
(8.6) 10
(0.8) t2l5
(100.0)
Source:
Field Work
(200712008)
Table I I shows the percentage
of
savings of households by income and
gender
ofhousehold head. It is found that
the higher the income of the head of
household,
the higher the savings
are. For
example, in male-headed households
having income levels of RM7, 501 to
RM10, 000, 28.9 per cent of them save as
much
as
60.01
to 80.0
per cent.
Meanwhile
in the households having the income levels
of more than RM15, 000, it was found that
33.3 per cent of the households
have the
same
percentage
of savings. There arc 36
male-headed
households
or L0 per cent do
not make any savings and 26.0 per cent
make loans
to cover their expenses.
On the contrary, the female-
headed households,
36.7 per cent of the
them make loans, 1.5 per cent do not have
savings and the rest have savings.
It was
found
that23.5
per cent save
from 40.01 to
60.0 per cent. Only 2.0 per cent was
recorded
to save more than 80.01
per cent
at various income levels. It was also
found
that most female-headed
households
save
more than 60.01 per cent. This reflects
better saving habit amongst the women
due to their better foresisht and awareness
of the future needs.
182
Male
Income
(RM)
Savings percentage
Total
<4.01 00.01
20.0
20.01
40.0
40.0r
60.0
60.01
80.0
>80.01
s1,000 224
(49.2) 14
(2.8) 97
(19.6) 81
fl6.3) 51
(10.3) 9
(1.8') 0
(0.0) 496
(100.0)
1,001
- 2,000 360
(36.1
)12
1.2\ 203
(20.3) 216
(21.6) 150
(15.0) 53
/5 ?l 4
(0.4) 998
(100.0)
2,001
- 3,000 183
(19.9) 4
(0.4) 154
(
16.8) 241
(26.3\ 244
(26
6\ 78
(8.5) t4
fl.5) 918
(100.0)
3,001
-4000 t02
fl8.I) -)
(0.5) 70
02.4\ 138
(24.5) r77
(31
.4) 69
(12.2) 5
(0.9) 564
(100.0)
4,001
-5,000 40
/L3.2) I
(0.3) 57
(18.8) 78
(2s.7) 82
(27.1) 43
(14.2) L
(0.7) 303
(100.0)
5,001
-7,500 24
(r0.3) z
(0.e) JJ
(r4.2) 48
(20.6) 68
(2e.2) 55
(23.6) -l
(1.3) 233
(100.0)
7,501
- 10,000 L
(2.4) 0
(0.0) t2
(
14.5) l6
(
l e.3) 26
(31
.3) .A
(28.e) J
(3.6) 83
(100.0)
10,001
- 15,000 2
(3
1) 0
(0
0) 5
(7.7) 10
(15.4) 17
(26.2) 27
(41.5) 4
(6.2) 65
(100.0)
>15,001 0
(0.0) 0
(0.0) 4
(6.7) 2
(8
3) 7
(2e.2) 8
| 11 1l
J
(r2.s) 24
o00.0)
Total 957
(26.0) 36
(1.0) 635
(r7.2) 830
Q2.5) 822
Q2.3) 366
(e.e) 38
(1.0) 3684
(100.0)
Female
sl,000 42
t14 at
J
(3.e) 6
(7
8) 15
(
le.5) 7
(e.l
)-l
(3
e) I
(1.3) 77
000.0)
1,001
- 2,000 25
(45.5) 0
(0.0) 7
(r2.7) t2
(2
1.8) 7
(r2.7) 4
(7.3) 0
(0.0) !r
(100.0)
2,001
- 3,000 J
(10.0) 0
(0
0) (13.3) 9
(30.0) 8
(26.7) (16.7) 1
(3.3) 30
(100.0)
3,001
-4000 0
(0.0) 0
(0.0) 4
(25.0) 2
(r2.s) 5
(31.2) +
(25.0) 1
(6.2) T6
(100.0)
4,001
-s,000 L
(16.7) 0
(0.0) U
(0.0) 6
(50.0) 2
(16.7) 2
(16.7) 0
(0.0) t2
(100.0)
5,001
-7,500 0
(0.0) 0
(0.0) 0
(0
0) 0
(0.0) 1
(25.0) L
(50.0) I
(25.0) 4
(100.0)
7,501
- r0,000 0
(0
0) 0
(0
0) 0
(0.0) z
(
100.0) 0
(0.0) 0
(0.0) 0
(0.0) .,
(100.0)
Total 72
(36.7) 3
(1.s) 2l
(10.7) 46
(23.s) 30
(1s.3) 20
(10.2) 4
(2.0) t96
(100.0)
The
Relationship behveen
Income. Expenditure and Household Savings
in Peninsular lvlaloysia
Table 11: Percentage
of Savings by Monthly Income and Gender of Household Head
Source: Field
Work Q007
12008)
183
Table 12 shows the savings of
households by monthly income and
ethnicity.
28.8 per cent
of the Malays save
from 40.01 per cent to 60.0 per cent in
income ranging from RM5, 001 to RM7,
500. Only 0.9 per cent having the income
of RMl0, 001 to RM15, 000 are recorded
to make loans
to cover their expenses.
A
total of 97.8
per cent of the Chinese save at
various levels of percentage of savings
mostly from 40.01
to 60.0 per cent. It is
()f And Family
similar for the Indian households
whercin
35.3
per cent of them save
from
40.01h
60.0 per cent. The Malay households
is
recorded to save more than the Chinese
households. This is evident in the
percentage
of savings
of 40.01
to 60.0 pr
cent in which 38.2 per cent Malay
households save in this range while only
35.3 per cent of Chinese
households
save
at the same
percentage
of savings.
mi
ai.d
UH
Table 12: Percentage
of Savings by Monthly Income and Ethnicity
Malays
lncome
(RM)
Savings Dercentage Total
s 4.01 00.01
20.o
20.0r
40.0
40.01
60.0
60.01
80.0
>B0.01
s1,000 235
(49.2\ 14
(2.9\ 85
(17.8) 82
(17.2\ 52
(10.9) 9
fl.9) I478
fl00.0)
1,001
-
2,000 294
(37.0) 8
(1.0) 159
(20.0) 170
(21.4) 118
fl4.8) 44
(5.5
)z
(0.3) 795
fl00.0)
2,001
- 3,000 129
(
1
9.3) 2
(0.3) 107
(16.0) 173
(25.8) 189
(28.2\ 61
(9.1) 9
(1 670
fl 00.0)
3,001+000 78
(20.2\ 2
(0.5) 38
(23.s) 98
Qs.4\ 126
(32.6) 40
(10.4) A
(1.0) 386
fl00.0)
4,001
-5,000 L-)
(1
1.9) 0
(0.0) 38
(9.8) 51
(26.4\ 51
(26.4) 30
(
t
s.s) 1
(0.s) 193
fl00.0)
5,001
-7,500 t7
(12.9) 2
r1.5) .I
(19.2\ 27
r20.5) 38
(28.8) 28
(21.2) 2
(15) t32
(100.0)
7,501
- 10,000 I
(2.2) 0
(0.0) 18
(
13.6) l2
(26.1\ ll
(23.9\ IJ
(28.3) 2
(4.3) 46
(1{n_0)
10,001
- 15,000 (3.1 0
(0.0) 7
(ls.2\ 6
(18.8) 10
(31.2) 1l
(34.4\ z
(6.2) 32
(100.0)
>15,001 0
(0
0) U
(0.0) z
(18.2) I
(e
1) (27.3) 4
(36.4) 1
(e.l
)1l
000.0)
Total 778
Q8.4) 28
(1.0) 455
(16.6) 620
Q2.6) 598
Qr.8) 240
(8.7) 24
(0.e) 2743
(100.0)
Chinese
51,000 JI
(50.0) -l
(4 8) 12
(le.4) 10
(r6.1
)-l
(4 8) J
(4.8) 0
(0.0) 62
(100.0)
1,001
-
2,000 &
(38.8) z
(1.2) -t -l
(20.0) )z
(1e.4) 26
(15.8) -7
(4.2) 1
(0
6) 165
(100.0)
2,001
- 3,000 46
(2.1.3) 2
(0.e) 40
(
18.5) 58
(26.e) 46
(21
.3) 20
(e.3) 4
(1
e) 2t6
(100.0)
3.001+000 18
(
I 1.2) 1
(0
6) -)L
(20.0) 34
(2r.2) 44
(27.5) 29
(l
8.1
)2
(1.2) 160
(100.0)
184
The Relationship befireen lncome, Expenditure and Household Savings in Peninsular lvlalaysia
Table l2 (Continued)
Chinese
4,001
-5,000 16
(rs.2) I
(1.0) l8
(
17.1
)29
(27.6) 27
(2s.7) l3
(r2.4) I
(1.0) 105
(100.0)
5,001
-7,500 6
(6
6) 0
(0
0) l3
(
14.3) t8
(1e.8) 24
(26.4) 28
(30.8) 2
(2.2) 91
(100.0)
7,501
- 10,000 I
(2.e) 0
(0.0) 5
(r4.7) 6
(r7.6) l2
(35.2) l0
(2e.4) 0
(0
0) 34
(100.0)
10,001
- 15,000 I
(3.3) 0
(0.0) z
(6.7) -f
(10.0) 6
(20.0) 16
l\{ {t 2
(6.7) 30
(100.0)
>15,001 0
(0.0) 0
(0.0) I
(e
1) I
(e
1) 4
(36.4) 4
(36.4) 1
(e.l
)ll
(100.0)
Total 183
(20.e) 9
(1.e) 156
(17.8) 191
8t.e) t92
Q2.o) 130
(14.e) 13
(1.s) 874
(100.0)
Indians
s1,000 20
(60.6) 0
(0
0) 6
(
18.2) 4
(12.1) J
(e.1) 0
(0.0) 0
(0.0) 23
(100.0)
1,001
- 2,000 27
(2e.0) 2
(2.2) 18
(1e.4) 26
(28.0) IJ
(14.0) 6
(6.5) 1
(l.l) 93
(100.0)
2,001
- 3,000 11
(17.7) 0
(0.0) ll
(17.7) 19
(30.6) t7
(27.4) 2
(3.2) 2
(3.2) 62
(r00.0)
3,001
-4000 6
(17.6) 0
(0.0) 4
(l1.8) 8
(23.s) t2
(35.3) 4
(l
1.8) 0
(0
0) 34
(100.0)
4,001
-5,000 J
(17.6) 0
(0.0) z
(l
1.8) 4
(23.5) 6
(35.3) 2
(l
1.8) 0
(0
0) t7
(100.0)
5,001
-7,500 1
(7.1) 0
(0.0) 2
(14.3) J
(21..4) 7
(s0.0) I
(7.r) 0
(0
0) t4
(100.0)
7,501
- 10,000 0
(0.0) 0
(0.0) 0
(0.0) 0
(0.0) J
(60.0) I
(20.0) I
(20.0) 5
(100.0)
10,001
- 15,000 0
(0.0) 0
(0.0) I1I
(JJ.J) 0
(0.0) 0
(0.0) J
(100.0)
>15,001 0
(0.0) 0
(0
0) 1
(50.0) 0
(0
0) 0
(0.0) 0
(0.0) I
(50.0) 2
(100.0)
Total 68
(2s.e) )
(0.8) 45
(17.1) 65
Q4.7) 62
Q3.6) t6
(6.1) l
(1.e) 263
(100.0)
iource: Field Work (2007
/2008)
lhe composition of expenditure and
ncome
-expenditure elasticities
he analysis of the relationship between
ncome and expenses are often being
ssociated
with Engel curves. Engel curve
r a curve showing the changes
in quantity
€manded
ofgoods or services to changes
ln consumer lncome levels. It is also
known as income-consumption curve
(Rahmah
Ismail & Idris Jajri, 1990). This
curve can be used
to classify goods into 3
groups; luxury goods, normal goods,
and
inferior goods. For the normal goods, the
Engel curve is positively skewed while for
the inferior goods, it is negatively skewed.
185
t,,l
#
Gffi Malaysian Journal Of Consumer And Family Economics
This means that the consumers who have
large income will stop spending on the
inferior goods because they have the
ability to spend on the better items. In
addition, for products that have a
Marshallian demand function, the Engel
curve will have a constant slope.
(Http
: //en.wikipedia.
org).
In analyzing the relationship
between income and expenditure
to get the
value of elasticity, this study divided the
expenses into five categories,
which are
the daily expenses including food and
clothing; utility expenses including
payment of electricity, water and gas,
rental and loans;
education
and health. The
expenditure model is being constructed
with total expenditure as the dependent
variable and the income and household
size as the independent variables. The
Similarly, for the second model
(EXPKn), which represents
expenses for
daily needs
of the households,
the income
and household size affect the amount of
monthly expenses
for this category. An
increase
of I per cent in the income
will
For the utility expenses
(EXP7), it
was found an increase of I per cent in
income will increase
the utility expenses
by 0.664
per cent, while an increase
of I
lnEXPor
= 0.918 +0.765lnYIR+0.200lnBIR+ p
(
12.690).-.
(g7.0gg)..' (12.97
0).'.
estimated result are as below. Values
in
parentheses indicate t and *** shows
significant at the l% significance level
while * shows significant at the l0%
sisnificance
level.
The first model (EXPeya) is a
model of the overall expenditure of
households in Peninsular Malaysia. It
shows that the income and household
size
influence the household monthly
expenditure positively and significantly,
When there is an increase in income
of I
per cent, the spending will increase by
0.765 per cent. When the household
member increases by one per cent, the
expenses also rise by 0.2 per cent.
These
results indicate that the marginal
propensity to consume is higher than
the
marginal propensity to save and this is
normal for a moderate income level.
increase
the daily spending by 0.477
per
cent, while an increase in one per cent
in
the household member will increase total
spending by 0.299 per cent on the datly
needs.
per cent in household member will
increase
the utility expenses by 0.138
per
cent.
(l)
InEXP*u
= 1.810 +0.477lnYIR+0.299lnBIR+ p
(
I 8.76g)...
(40.67
6)'..
(14.520)... (2)
InEXP,
: 0.44 + 0.664lnYIR+
0.1381n
B1R + rz
(4.7
g4)...
(59.53
11***
17.03
g;"' (3) |
I
I
j
186
The
Relationship between
Income, Expenditure
and Household savings
in Peninsular Malaysia
Rental and loan payments are
represented
by (EXP1B) in the fourth
model
below. A 0.835 increase
in rental
and loan payments occurs when there is an
increase of I per cent in household
income. However, the expenditure for
The results of the analysis of
health
expenditure (EXPa) show a similar
trend where health expenditure increases
by 0.812 per cent when I per cent of
Education expenses (EXPEDU)
increases
by 0.516 per cent
when income
rise
by I percent.
ln addition, expenditure
ity for the Malaysian households
study is 0.756.
This means
that the
inal propensity
to consume
is higher
the marginal propensity
to save.
This
ion is normal for the moderate
level described
by this sample. The
elasticity is high on
health expenses, rental and loan
. This means that when the
increases, the Malaysian
will increase
their focus
on the
expenses
and rental and loans and
reflects
the higher
standard
of living.
InEXP*, = -0.274
+ 0.835In1,IR
-O.l25lnBIR+ 1t
(-l.gl l). (45.948)..* (-4.3
lg)."
rental and loan payments
will decrease
when the household
member increases.
Other expenses
to meet the needs of
increasing
family members
resulted
in the
deduction of rental and loan which then
affecting
the outstanding
debt.
income increases,
whereas,
the expenditure
on health will decrease by 0.129 per cent
when the household member increases
by
I per cent.
on education increases
by 0.29 per cent
when there is a I per cent
an increase
in
the
household
members.
made to purchase citrs or house while
health expenses include supplements
intake increase as income increases.
Expenditure-income
elasticity of daily
needs
is low because
an increase
in this
type of expenses in particular
foods
and
beverage is not large when income
increases. Similarly, the expenditure-
income
elasticity
for education
is found
to
be at a moderate
level
that
reflects
that the
public education provided by the
govemment
does not require
the household
to increase
a lot on this expenditure
(see
Table l3).
(4)
lnEXPu
: -1.549
+ 0.8l2ln
WR-,.l29lnBIR+ 1t
(-g.039)...
(35.
150)...
(-3.
120)... (s)
(6)
ln EXP*, = 0.784 + 0.5I6lnYIR
+ 0.297
ln
BIR + p
(4.
139)'..
(23.569)..* (6.
100)***
The overall expenditure-income
payments
may include the loans
r87
mJournal Of And Familv
Table
13:
Expenditure-Income Elasticity
Summary
The analysis in this paper clearly
shows that the power of spending and
saving is highly related to household
income
levels.
Urban
households,
Chinese
ethnicity and male-headed households
are
found to have greater spending power
compared to rural households, Malay and
Indian ethnicity and female-headed
households respectively. However, the
savings
habit are different. There are some
households
who do not have savings and
are even making loans to cover for their
expenditure. This is alarming because
it
can affect the future consumption and also
the spending on children
needs.
The analysis also shows that the
majority of proportion of expenses
is for
rent and loan payments while the lowest
on education and health. However, the
expenditure-income elasticity for both
categories
is high which reflects that the
increase in income will increase health and
education expenses. The implications of
these findings is that the increase in
household income is vital in improving
the welfare of household through
improving their health
and education.
In conclusion, the study on the
household expenditure patterns is
important in explaining how households
allocate their income to consumption and
savings which ultimately determine the
levels of their welfare and quality of lifo.
This research is also important to provide
an accurate depiction to the public and the
govemment about the ability to spend and
save of the general Malaysian society so
that the policies implemented can address
the specific elements that can increase
the
savings and spending capacity of the
community to improve the welfare of
households
of the present
and the future.
References
Fabiosa,
J.
F.
and
L Soliman.
2008.
Egypt's Household Expenditure Pattern:
Does It Alleviate A Food
Crisis?.
www.card.iastate.edu
Forsyth, F.G. 1960. The Relationship
between
Family Size and
Family
Expenditure
.
Journal of the Royal Statiscal
Society. 123
: 367-397.
Henderson, J.V and W. Poole. 1991.
Principles of Economics. Lexington: DC.
Health and Co.
Expenditure
Category Elasticity
Overall 0.765
Daily Needs 0.477
Utility 0.664
rentals
and
Loan Payment 0.835
Health 0.812
Education 0.516
188
The Relationship behreen Income, Expenditure and Holrsehold Savings in Peninsular Malaysia
http
://en.wikipedia.
org
http://gwbweb.wustl.edu
Jabatan
Perangkaan
Malaysia. 2008. Buku
Tahunan
Perangkaan Malaysia 2007.
Jabatan Perangkaan Malaysia. 2007.
Perangkaan Ekonomi - Siri Masa 2007.
Jabatan Perangkaan Malaysia. 2006.
Laporan Penyiasatan Expenses Isi Rumah
2004/05.
Malaysia. 2005. Malaysia
Quality of Lfe
2004. Kuala Lumpur : Percetakan
Nasional
Malaysia
Berhad.
Malaysia. 2006. Rancangan Malaysia
Kesembilan,
2006-2010. Kuala Lumpur:
Percetakan Nasional Malayisa Berhad.
Malaysia. 2008. Kajian Separuh Penggal
Rancangan Malaysia Kesembilan 2006-
2010.Kuala Lumpur : Percetakan
Nasional
Malaysia Berhad.
Ong Fon Sim and Tee Ying Shuang.
2004.
Money Attitude, Saving Behaviour and
Consumption Pattems Among Young
Urban Consumers
in Malaysia : An Ethnic
and Gender Comparison. Malaysian
Jounal Of Consumer and Family
Economics, 7:16-28.
Phipps, S.A. and P.S. Burton. 1998.
What's Mine is Yours? The Infuence of
Male and Female Incomes on Pattems of
Household Expenditure. Economica 65
599-613.
Rahmah Ismail and Idris Jajri 1990.
Sistem Permintaan Pengguna. Kuala
Lumpur : Dewan Bahasa Dan Pustaka.
Rogers,
J.M. 1988. Expenditure
of Rural
and Urban Consumers
1972/73
to 1985.
Monthly Labour Review
(March): 4I-45.
Xu, Ke and F. Ravindal.
2007. Assessing
the Realiability of Household Expenditure
Data: Results
of the World Health Survey.
Discussion Paper No.5, World Helath
Organization.
189
| sSN 151
1- 2802
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This paper uses microdata from the 1992 Statistics Canada Family Expenditure Survey to provide evidence that male and female incomes do not always exert identical influences on household expenditures. The novelty of the paper lies in its demonstration that, while incomes may be pooled for some categories of consumption (e.g. housing), the income pooling hypothesis must be rejected for others. We also go beyond simply rejecting the pooling hypothesis to ask how male versus female income is used. Our results stress the on-going importance of traditional gender roles. For example, we find that expenditures on child care increase only with women's incomes-higher male income is not associated with higher expenditure on child care even when both spouses are full-time, full-year paid workers.
Article
The World Health Survey (WHS) which has been implemented in more than 70 countries with standardized questionnaires opens a great opportunity for research on health care financing issues. This study examines the household expenditures and health expenditure collected in the WHS in terms of reliability, consistency between different ways of data collection within the survey and with other types of household surveys. Data used in this study include 50 WHS and 37 other type of surveys, namely the Living Standard Measurement Survey, Household Budget Survey and Income and Expenditure Survey. The analysis consists of comparison of test-retest results; the aggregated and reported total household expenditure and health expenditure; the expenditures from the WHS and other type of surveys. The results from test-retest are fairly similar in the WHS. For health expenditure the average of reported total is lower than the aggregated total while for household total expenditure the estimate is similar from the two measures. Finally the WHS was found to report lower total household expenditure but higher out-of-pocket expenditure comparing with other types of surveys. The study suggests further efforts to standardize the questions in collecting expenditure data in household surveys for the purpose of cross-country and over time comparison.
Principles of Economics
  • J Henderson
  • W Poole
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Malaysia Quality of Lfe
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Sistem Permintaan Pengguna
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