Determinants of Household Consumption Expenditure in Debremarkos Town, Amhara Region, Ethiopia

  • Zehiwot Hone Department of statistics, Wolaita Sodo University, P.O.Box 138, Ethiopia
  • Senapathy Marisennayya Department of Rural Development and Agricultural Extension, Wolaita Sodo University, Ethiopia
Keywords: Consumption, Disposable income, linear regression, Household Heads, Expenditure, Saving


Household consumption expenditure is the desired amount incurred to meet out their basic needs such as food, clothing, housing, transport, etc to fulfill their day to day life. Household’s decision on how much to consume or save is a microeconomic question as it deals with the individual units of the economy. The main objectives of the research study were to assess and to evaluate consumption expenditure of the households at Debremarkos town in Amhara region of Ethiopia. A total of 100 respondents, were randomly selected to administer the interview schedule for data collection. The data were described using means and histograms .The multiple linear regression model was applied to identify determinants for consumption expenditure of a household. The descriptive result shows minimum monthly consumption level of respondents is 683 Birr and maximum is 16,433 Birr. The mean monthly consumption level is 5777 Birr.  Households expend more for food and next to other basic needs like cloth. The mean consumption value of those who are working in Governmental institutions was less than self-employed households. The econometric model pointed disposable income and family size are directly related to consumption; and saving amount is negatively related with consumption. Disposable income is also found to be most determinant factor to determine household consumption. Finally, the study recommends that a household should practice family planning and aware to develop saving habit rather than spending more to irrelevant activities.


Anyanwu, J. C. (1995). Revenue allocation and stable fiscal federalism in Nigeria. Journal of Economic Management, 2(2), 1-28.

Dourn bush, (1975): Macro Economics, consumption and saving Chicago University

Duesenberry,James(1949):Income-consumption relations and their implication in Lioyd Metzler,editor,income employment and public policy

Keynes,J.M(1936): The general theory of employment, interest and money, London press,page 113

M.Gregory Mankiew (2015): Macro Economics, Harvard University press

R.Nelson and David (2010), an evolutionary theory of household consumption behavior,colombia,University New York,USA and University of Mancheste

Samuel Berhanu: ”Econometric Analysis of Household consumption Expenditure” Thesis for Ph.D. at West Virginia University, 1999r,UK

Schorfheide, Frank (2010) “loss function evolution of DSGE model” journal of applied economics, 15

Sitotaw and Nigus, (2006), Introduction to Economic, AA, Kuras International Bublisher

Soni, R.N (2003). Leading issue in agricultural economics theoretical and applied, New Delhi

Zelalem Tesfaye, (2005), analysis of household consumption behavior. Ethiopia AA University

WorldBank nd, htt: //data. World

Park, S. (2016). How to Consume and Invest for Retirement: Revisiting Friedman's Permanent Income Hypothesis. Forthcoming in Retirement: Key Issues, Challenges and Opportunities.

Bajari, P., Chan, P., Krueger, D., & Miller, D. (2013). A dynamic model of housing demand: Estimation and policy implications. International Economic Review, 54(2), 409-442.

Segura, A. (2006). Management of oil wealth under the permanent income hypothesis: the case of São Tomé and Príncipe (No. 6-183). International Monetary Fund.

ASIMAKOPULOS, A. (1986). Harrod and Domar on dynamic economics. PSL Quarterly Review, 39(158).

Ndubueze-Ogaraku, M. E., Oyita, G. E., & Anyanwu, S. O. (2016). Analysis of Household Consumption Expenditure on Selected Staple Foods in Ika North East Local Government Area of Delta State, Nigeria.

Sharma, M. (2016). Theoretical foundations of health education and health promotion. Jones & Bartlett Publishers.

Thomas, A. (2013). Determinants of Consumption Expenditure in Ekiti State. Journal of Culture, Society and Development, 2(1).

Friedman, M. (1972). Comments on the Critics. Journal of Political Economy, 80(5), 906-950.

Mitchell, T. R., & Mickel, A. E. (1999). The meaning of money: An individual-difference perspective. Academy of management review, 24(3), 568-578.

Mitchell, W. C., & Ginzberg, E. (2017). The backward art of spending money. Routledge.

Modigliani, F. (1986). Life cycle, individual thrift, and the wealth of nations. Science, 234(4777), 704-712.

Becker, G. S. (2013). The economic approach to human behavior. University of Chicago press.

Mutyaba, F. (2014). Determinants of household savings and the effect of household savings on the stock market in South Africa and China: a comparative survey (Doctoral dissertation).

Mishkin, F. S. (2007). Housing and the monetary transmission mechanism (No. w13518). National Bureau of Economic Research.

Balli, F., & Balli, H. O. (2011). Income and consumption smoothing and welfare gains across Pacific Island countries: The role of remittances and foreign aid. Economic Modelling, 28(4), 1642-1649.

Ando, A., & Modigliani, F. (1963). The" life cycle" hypothesis of saving: Aggregate implications and tests. The American economic review, 53(1), 55-84.

Stigler, G. J. (1954). The early history of empirical studies of consumer behavior. Journal of Political Economy, 62(2), 95-113.

Magrabi, F. M., Chung, Y. S., Cha, S. S., & Yang, S. J. (1991). The economics of household consumption. Greenwood Publishing Group.

Steyn, N. P., Mann, J., Bennett, P. H., Temple, N., Zimmet, P., Tuomilehto, J., ... & Louheranta, A. (2004). Diet, nutrition and the prevention of type 2 diabetes. Public health nutrition, 7(1a), 147-165.

Williams, J. H., Phillips, T. D., Jolly, P. E., Stiles, J. K., Jolly, C. M., & Aggarwal, D. (2004). Human aflatoxicosis in developing countries: a review of toxicology, exposure, potential health consequences, and interventions. The American journal of clinical nutrition, 80(5), 1106-1122.

Kuma, T. (2010). Analysis of Changes in Food Consumption Patterns in Urban Ethiopia (No. 002). Ethiopian Development Research Institute.

Ruel, M. T., Minot, N., & Smith, L. (2005). Patterns and determinants of fruit and vegetable consumption in sub-Saharan Africa: a multicountry comparison. Geneva: WHO.

Yamane, T. (1973). Statistics: An introductory analysis.