The relationship between income, expenditure and household savings in Peninsular Malaysia

Rahmah Ismail, Norlinda Tendot Abu Bakar

Research output: Contribution to journalArticle

1 Citation (Scopus)

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 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.

Original languageEnglish
Pages (from-to)168-189
Number of pages22
JournalMalaysian Journal of Consumer and Family Economics
Volume15
Issue number1
Publication statusPublished - 2012

Fingerprint

Income
Household saving
Expenditure
Malaysia
Household
Savings
Expenses
Income level
Elasticity
Loans
Payment
Household expenditure
Household income
Health
Healthcare
Stratified sampling
Consumption patterns
Sampling methods
Sampling
Health status

Keywords

  • Expediture
  • Household
  • Income
  • Savings

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

The relationship between income, expenditure and household savings in Peninsular Malaysia. / Ismail, Rahmah; Tendot Abu Bakar, Norlinda.

In: Malaysian Journal of Consumer and Family Economics, Vol. 15, No. 1, 2012, p. 168-189.

Research output: Contribution to journalArticle

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