Determinants of Household Consumption Pattern in Federal Capital Territory (FCT), Abuja

Determinants of Household Consumption Pattern in Federal Capital Territory (FCT), Abuja

EKOJA, Ematun Vivian¹*, OLANIYI, Oyinlola², and IHUOMA, Anthony³

^1,3Veritas University Abuja, Department of Economics, Nigeria.

²University of Abuja, Department of Economics, Nigeria.

*Corresponding Author

DOI : https://dx.doi.org/10.47772/IJRISS.2024.8120031

Received: 18 November 2024; Accepted: 25 November 2024; Published: 28 December 2024

ABSTRACT

This paper examines the determinants of household consumption pattern in Abuja, Federal Capital Territory (FCT) by conducting comprehensive analysis of key factors, influencing household consumption pattern. The study adopted quantitative research method. The utilized data were sourced using questionnaires which were randomly administered to Abuja Municipal Area Council (AMAC), Bwari and Kwali residents in FCT, Abuja. Among others, the empirical results showed that disposable income of an individual in FCT, significantly influences where the person lives, wealth acquisition and generally the household consumption pattern. It also established that family size such as number of spouses, children and extended family members significantly influence household consumption pattern in terms of wealth acquisition and the choice of house-type. In addition, the study revealed that family members’ employment status (particularly, father), significantly influenced household consumption. Also, a price hike and household-members’ age (especially the children) significantly influenced household consumption patterns. However, the empirical results established that social group activities have no significant influence on household consumption. This paper recommends policies that focus more on promoting economic opportunities, skill development programmes, and provision of credit facilities to increase households’ consumption powers.

Keywords: household consumption pattern

INTRODUCTION

Consumption remains a vital economic activity that directly impacts the well-being of the economy and represents a substantial proportion of the disposable income available to households. Analysis of household consumption patterns has gained significant attention from many researchers (Habanabakize, 2021; Obalola, et al., 2021; Haya, et al., 2023; Yun et al., 2024.), especially in emerging countries such as Nigeria, where food costs constitute a substantial proportion of household income and often impact consumption trends. A comprehensive knowledge of home spending patterns is crucial for effective household expenditure planning in Nigeria (Obayelu, et al., 2009). Habanabakize (2021), Haya, et al. (2023), and Yun et al., (2024) argue that the fundamental issue with consumption lies not in the consumption itself, but rather in its patterns and impacts on economic aggregates such as poverty, inequality, and environmental degradation. Optimizing the home spending pattern of the economy is crucial for enhancing the well-being of individuals. Welfare indicators appear to have a correlation with consumption patterns. Needs such as improved housing, healthcare, education, sanitation, clean water supply, and basic infrastructure have been identified as significant indicators of human development and welfare in Nigeria. The consistent improvement in this measurement indicates a reduction in poverty and an improvement in the buying patterns of households.

Hence, this study aims to examine the disposable income and other factors that influence the household consumption pattern in the Federal Capital Territory (FCT) Abuja, Nigeria. The precise aims of this study are:

1. Assess the effect of disposable income on the consumption pattern of FCT residents;
2. Examine the influence of the family members’ employment status on household consumption pattern of FCT residents;
3. Evaluate the influence of family size on the consumption pattern of the FCT residents; and
4. Determine if hike in price of goods and services have significant impact on consumption pattern of FCT residents.

LITERATURE REVIEW

Conceptual Clarification

Household

The concept of household varies between countries and change in time. Sharing (part of) a housing unit and at least some resources (e.g. food) are conditions that a group of people must satisfy in order to be registered as a household. In some countries the co-residence criterion prevails for defining a household; in other countries it is the resource sharing which makes the household an economic and social unit. Resource sharing is generally operationalized as purchasing and preparing food together and/or having meals together. It is more than sharing a kitchen. The criteria often use to define a household often depend on the sources of data. A household, also referred to as a private household, is either (a) a one-person household, that is, a person who makes provision for his or her own food or other essentials for living without combining with any other person to form part of a multi-person household; or (b) a multi-person household, that is, a group of two or more persons living together who make common provision for food or other essentials for living. The persons in the group may pool their resources and have a common budget; they may be related or unrelated persons or a combination of persons both related and unrelated (United Nations, 2008). This arrangement exemplifies the “housekeeping” concept. Some countries use the “household-dwelling” concept, which regards all persons living in a housing unit as belonging to the same household. According to this concept, there is one household per occupied housing unit. Therefore, the number of occupied housing units and the number of households occupying them are equal and the locations of the housing units and households are identical.

Household was defined by Bailey and Boyle (2004) to conceptualize dual-earner households as networks connections between partners, their families, friends, and places of work. Household was also defined by Were et al., (2006) as persons who shared food cooked at a common hearth and slept in the same house or cluster of houses for at least five days in a week for the preceding three months. Households are officially defined in terms of resource sharing alone: ‘a single person or a group of people who have the address as their only main residence and who either share one meal a day or share the living accommodation’ as the UK General Household Survey puts it (Office of Population Censuses and Surveys, 1992 as cited in Davenport et al., 2000). Disparities in the aforementioned definition are plenty. Two out of the three definitions refer to the length of time or frequency of the sharing component: one talking about five times a week for the preceding three months, the other mentioning sharing one meal per day. That ‘household’ and ‘family’ may be hard to differentiate in the literature is best illustrated by the following quotation: Thus, both related and not related individuals living within a household may function as a family, as Distelberg and Sorenson (2009) suggested. However, those sharing a household may not function as family members when they do not share the long-term goals and commitments of the family (Distelberg and Sorenson, 2009, cited in Rodriguez, et al., 2009). The commonality in these household definitions is a household is a single person or a group of people (partners, single person or group of people) who share something (networks, food, an address, living accommodation). Hence, this study relies on the commonality in the definitions as earlier described.

Consumption Pattern

Consumption is simply defined as the total demand for all consumer goods and services. Anyanwu (1995) and Frank and Bernanke (2001) defined consumption expenditure as the spending by households on goods and services such as clothing, food items, entertainment, health services and acquisition of assets among others. Arising from this definition is the concept of consumption function which shows the relationship between consumption and disposable income.

Consumption pattern refers to the aspect of a lifestyle or livelihood that relates to the nature and amount of the different goods and services that households consider adequate for meeting their needs. While lifestyle is the way of living that reflects a household’s values and attitudes, consumption pattern is the consumption of goods and services that characterize that lifestyle. Here, emphasis is placed on the consumption of a specific commodity or service by households such as types of transportation, food, clothes, and so on, and not on the function of consumption. Consumption patterns are important drivers of development in the developed countries (Crivits, 2008). The consumption pattern of a household therefore is the combination of qualities, quantities, acts and tendencies characterizing a household or a human group’s use of resources for survival, comfort and enjoyment. Of course, the type of goods consumed, varies from region to region. In a developing country like Nigeria the consumption pattern may be skewed towards non-durable goods. While in developed countries the opposite is the case. The more developed a country or society becomes the less it depends on non-durable goods and the more it spends on durable goods (National Bureau of Statistics, 2020).

Consumption patterns provide the structure for everyday material life, and this structure creates economic distance across classes. People belonging to different classes of income have different structures of consumption. Rich people spend more for each class of items in absolute terms, but they spend low percentage of income for food and basic needs and poor people spend higher percentage of income on food and other basic needs. In short, the propensity to consume will be higher for poor and the propensity to save will be higher for rich (Glenn and Kenneth, 1986). Understanding consumption pattern is very vital to prediction of a country’s economic growth, mainly for the ones which have a consumer demand – driven economy which Nigeria is one of them. It is apparent that globalization has brought lots of changes in consumption patterns across the world and demand for innovative products and services increased, and due to this phenomenon, the consumption patterns of Nigerian consumers have been changing rapidly. (Finance Express, 2015) The spending patterns on various items like food, clothing, housing, education, recreation, entertainment, travelling and so on is changing. What is consumption pattern?

Consumption pattern has been defined and studied at different places all across the globe and a remarkable change has been observed over a period of time. According to Frank and Bernanke (2001), consumption pattern is simply defined as the household expenditure behaviour on goods and services such as clothing, food, entertainment, health services and the acquisition of assets and others. This definition describes the function of the relationship between consumption and disposable income. Consumption can occur either immediately or delayed. It happens based on how satisfied consumers are with the purchases and how they are to buy a certain product or brand in the future (Blackwell, et al., 2006).

The Economic Commission for Europe (ECE, 1998) described consumption pattern as the type, nature and quality of the goods and services consumed. Human needs can be satisfied by a range of products (for each specific need), there is a wide range of satisfiers that essentially fulfill the same objective, but at a different level of resource use, complexity and specialization. For example, nutritional needs can be satisfied by a diet high in animal protein, or by one that is either partially or wholly vegetarian. Needs for mobility can be addressed either by private automobile or public transport. In terms of satisfaction of the need, the result is the same, but in terms of the consumption of resources there can be great differences, sometimes various orders of magnitude.

In addition, ECE (1998) termed consumption pattern as the volume of consumption. ECE described it as the amount of goods and services consumed. Here again (similar to NBS 2020), human needs can either be satisfied adequately by a limited amount of goods and services, or these can be multiplied, specialized and diversified endlessly, thus increasing resource use as well as the amount of goods each individual consumes. Clothing is an example, individuals can be adequately clothed with a few items, or, responding to fashion and specialized clothing, the items consumed can be increasingly numerous. Similarly, the various gadgets that carry out similar tasks can be multiplied, for example, in the field of communications, where there is now a bewildering array of goods available. Often, the difference between the products is minimal, and choice is made by the individuals, but the end result is that people gain satisfaction from the goods consumed. Based on the commonalities in definitions of consumption pattern, it is apparent that they all tend towards the description of household consumption pattern as the combination of qualities, quantities, acts and tendencies characterizing a community or a human group’s use of resources for survival, comfort and enjoyment. This study therefore adopts the NBS (2020) as its working definition of consumption pattern.

Theory of Household Consumption Behavior

According to Friedman (1972) and Modigliani (1986), the Life Cycle Hypothesis (LCH) asserts that an individual’s consumption at any given time depends not only on his income at that era but also on the value of his predicted income and wealth. This is predicated on the idea that, even if a person’s income stream may vary significantly during their life, their consumption rate at any given time is the result of a plan to equalize their consumption over their life cycle. The idea states that unless a person is born wealthy, their lifetime consumption cannot exceed their lifetime income because lifetime income and wealth are what finance consumption spending (Friedman, 1972). Retirement accounts for a significant portion of an individual’s lifetime income variation. Throughout their working years, the person saves money to balance off their retirement consumption. Most people anticipate that their income would decline after they retire and often plan to cease working at age 65. However, as indicated by their consumption, they do not wish for a significant decline in their standard of living. Thus, saving during one’s working years is necessary to maintain consumption after retirement (Mankiew, 2015). Therefore, a significant factor influencing the consumption habits of various households within the economy is the population’s composition.

Households have a cohesive and well-defined universal utility function, according to some study (Hone and Marisennayya, 2019). They argue that a household has needs, and the goods and services it purchases are intended to help it meet these needs. that families are able to ascertain, in a general sense, if certain requirements are being met or whether they are met more or less successfully in a certain situation as opposed to another. When one demand is more or less gratified than it was previously, households may find it challenging to assess whether their circumstances have improved or gotten worse if their basic necessities are met. However, their evaluation of the situation may differ (Nelson and David, 2010).

According to Nelson and David (2010), households may also recognize the trade-offs associated with varying degrees of satisfaction of distinct demands and may be more assured and consistent in their approach to satisfying specific needs in certain circumstances. Certain desires are undoubtedly partially biological and fundamental. Nonetheless, households in even the most primitive societies gravitate to a significantly wider spectrum of demands than those that are directly related to biological requirements. In addition, customs in various civilizations vary widely in how various needs—even basic ones—are satisfied. Consequently, the culture that surrounds a home and that of its members grow up in greatly influences both the wants that households attend to and the conventional methods of achieving them. Furthermore, it is evident that various homes have notable variations in certain experiences, situations, and other unique factors. Accordingly, household purchasing patterns are never entirely static, according to economic theory. Every time a new ingredient enters the picture, it influences consumer expenditure. Individuals get older, as do children, diseases and accidents happen, time passes and new friendships are formed. Concepts for novel activities are produced. Even under steady income and price conditions, these kinds of shifts never cease. The Life Cycle Hypothesis (LCH) theoretical formulation is hence the foundation of this study, as it has the capacity to integrate numerous facets of consumer behavior.

Empirical Literature Review

Ibbih and Siyan (2018) conducted a study that examined the consumption patterns of individual households in Nasarawa State, Nigeria. To ascertain the relationships between current consumption and disposable income, lagged incomes, and other variables that were considered valuable for modeling their effects on consumption behaviors, the probit model’s cumulative distributive function (CDF) was employed. Therefore, the results of this analysis and study indicate that non-durable consumption is the most significant factor in influencing consumption, indicating that the community’s consumption patterns favored non-durable products and necessities. Additionally, the models’ analyses demonstrated that the consumption of non-durable items and necessities exceeded that of the community as a whole. This demonstrated that the consumption patterns of this community and, by extension, of Nasarawa state were significantly based toward non-durable consumption and necessities. The results are crucial for the development of policies and programs that anticipate changes in the quality of life and the development of opportunities for the development of economies and the rural people, as well as for the creation of prosperity and the reduction of poverty. The policy implications of the aforementioned findings are that economic growth and development would be impeded by patterns that prioritize necessities and non-durables. The study indicate that policies focused on income growth, poverty reduction, rural development, and human capital investment are crucial to shifting consumption patterns in Nasarawa State. By encouraging households to move beyond non-durable consumption and necessities, such policies can promote broader economic growth, improve living standards, and reduce poverty in the region. While the study provides valuable insights into consumption patterns in Nasarawa State, but it has limitations. The focus on short-term relationships overlooks long-term factors like wealth accumulation, and the exclusion of other important variables (for instance social, cultural influences) narrows the analysis. Additionally, the study does not address strategies to promote durable consumption, limiting its scope for sustainable economic growth.

Hone and Marisennayya (2019) conducted research to evaluate and assess the consumption expenditure of households in Debremarkos town, located in the Amhara region of Ethiopia. A total of 100 respondents were randomly selected to administer the interview schedule for data collection in this study. Means and histograms were implemented to characterize the data. The determinants of a household’s consumption expenditure were identified using the multiple linear regression model. The descriptive result indicates that the minimum monthly consumption level of respondents is 683 Birr, while the maximum is 16,433 Birr. The average monthly consumption is 5777 Birr. In comparison to other fundamental necessities, such as clothing, households allocate a greater amount of expense to food. The mean consumption value of individuals employed by governmental institutions was lower than that of self-employed households. The econometric model indicated that consumption is directly correlated with disposable income and family size, while consumption is negatively correlated with saving amount. Disposable income is also identified as the most significant factor in determining household consumption. The study suggests that a household should prioritize the development of a savings habit and practice family planning, rather than spending excessively on irrelevant activities. Even though the findings were found remarkable, however the findings of the study were limited to disposable income and family size as the main determinants of household consumption. The study’s findings highlight the importance of disposable income, family size, and the role of savings in household consumption patterns. To enhance household financial security and improve living standards, policies should focus on encouraging savings, supporting family planning, promoting income growth, ensuring food security, and investing in human capital. By addressing these areas, policymakers can help households balance consumption with savings and long-term investments, ultimately contributing to economic stability and growth. Consequently, the study provides valuable insights into household consumption expenditure in Debremarkos, but it has limitations. The small sample size of 100 respondents may not fully represent the diverse population, potentially affecting the generalizability of the findings. Additionally, the focus on only disposable income and family size overlooks other significant factors influencing consumption, such as cultural and regional differences. The study also lacks an exploration of the impact of economic fluctuations on consumption patterns, limiting its comprehensiveness.

Onyeneke et al. (2020) used descriptive statistics to analysed the demand for imported rice, local rice, maize, and other cereals for Nigeria. The study used data of the Nigerian Living Standard Measurements Survey. Results of the study indicated that the imported and local rice are proved to be normal goods. However, imported rice is a luxury item while local rice is a necessity food item. The estimates of uncompensated cross-price elasticity showed that imported rice and local rice are complements in Nigeria. The study suggests improving the fish market by adding value through better packaging, processing, and storage facilities. This can be done by ensuring a reliable power supply and establishing agro-processing industries that are directly connected to production. It is however to note that this study was limited to household food consumption modelling. The study also failed to consider all household consumptions as an entity.

Ansah, et al., (2020) examined the food demand characteristics of three categories of consumers in Ghana based on fourteen selected food commodity groups. The study used Ghana Living Standard Survey for the year 2012–2013 and applied the Quadratic Almost Ideal Demand System (QUAIDS). The study found that fish and cereal products take close to half of the food budget of the average Ghanaian household. The study also found that female-headed households spent a higher proportion on food budget than their male counterparts. Based on the above, the study was limited to household food consumption and income and gender as its main determinants. The study on food demand characteristics in Ghana provides important policy implications. First, targeted nutritional programs should be developed to promote dietary diversity, as fish and cereal products account for nearly half of household food budgets; initiatives can include nutrition education and public health campaigns. Second, gender-sensitive policies are necessary since female-headed households spend a higher proportion of their income on food; financial assistance and food security programs should specifically support these households. Third, policies aimed at boosting household income through job creation and vocational training can enhance food security. Finally, implementing subsidies for essential food items and supporting local agriculture can stabilize prices and improve access to nutritious food, thereby promoting overall well-being in Ghanaian households. The reliance on the Ghana Living Standards Survey data from 2012–2013 may limit the findings’ relevance in the current economic context, as food consumption patterns and prices can change significantly over time. Additionally, while the study identifies income and gender as key determinants of food demand, it overlooks other crucial factors such as cultural influences, regional variations, and seasonal fluctuations in food availability. The use of the Quadratic Almost Ideal Demand System (QUAIDS) model, while sophisticated, may not fully capture the complexities of consumer behavior in diverse households. A mixed-methods approach could enhance the depth of understanding and applicability of the findings to contemporary food policy discussions.

Ojogho and Imade (2020) also used a multistage random sampling technique, but just focused on Edo State of Nigeria. The study estimated a complete food demand system and estimated the price and income elasticities using micro-data obtained from 252 households. Results of the study showed no strong complementarity and substitutability relationship among majority of the food commodities in the State. However, potatoes and meat were luxury food commodities in Edo state. It is however to note that Ojogho and Imade (2020) study was limited to household food consumption. The study failed to consider the entire household consumptions as an entity.

Okoronkwo et al. (2020), the study ascertained the determinants of consumption pattern of selected staple foods in Bende Local Government Area of Abia State. They utilized primary data using questionnaires from 126 household heads, and were analysed using descriptive statistics, Ordinary Least Square regression, and Z-test analytical technique. Findings from the study revealed that the mean age of households’ head, size, educational level and income were 37.60 years, 6 persons, 14.64 years, and ₦47660.04 respectively. The mean differences in household budget and expenditure on rice, garri and yam were (₦268.25), ₦3.17 and ₦33.33 respectively. From the empirical results, the determinants of rice consumption were age of the household heads, household size, education level and income. For garri consumption were age of the household heads, household size, and income. For yam consumption were age of the household heads, household size, education and income. It is remarkable that the study examined several factors influencing consumption patterns however the study only limited its scope to household consumption of food items.

Ojogho and Ojo (2021) investigated households’ food consumption pattern in south-eastern Nigeria using micro-data from 790 households. The study found that most of the food commodities like chicken, rice, yam, tomato, and pepper are luxury food commodities. However, the study was limited to food consumption pattern and failed to examine factors influencing the household food consumption pattern. Additionally, Gbigbi (2021) explored factors affecting the consumption of frozen fish in Delta State Nigeria. The study randomly sampled 120 participants from 12 communities. Among other findings, the study revealed that age, educational status, household size, income level, frozen fish prices and frozen fish substitute prices influence the consumption of frozen fish. Remarkably, the study examined influence of series of socioeconomic factors however it was limited to fish consumption pattern.

Salam et al. (2022) investigated the determinant of household food expenditure in Nigeria using Nigeria General Household Survey panel component (GHS-Panel) 2018/19 data set, using a multistage random sampling technique. The study findings revealed among others that variables like income, household remittances, access to loan, family size, and healthcare expenditure are all having significant impact on household food expenditure. However, factors like age, gender, and education do not have significant impact on household food expenditure. It was also revealed that families with high income tends to spend lower proportion of their incomes on food, which is consistent with the Engel law. Apparently, the study findings are remarkable it is however worthy of note that the study only examined the dynamics of household food consumption pattern based on the identified factors.

Haya et al. (2023) analysed the households’ food consumption pattern. This study made a significant contribution by estimating household age composition elasticities. Results from the study implied that food commodities are integral food items of household diet. Also, according to the findings of the household age composition elasticities, adding children to a household significantly increases its sugar consumption while significantly reducing its fruit consumption. Any increase in the size of the household by an adolescent, adult, or a person in their middle age results in a significant increase in the consumption of cereals and a significant drop in the consumption of fruits. To close, any increase in the size of the households brought about by an elder resulted in a significant rise in the consumption of cereals and a significant drop in the consumption of vegetables. The study evidently examined influence of socioeconomic factors like age and household size however the study investigation was only on household food consumption pattern.

In reference to empirical studies, it is evident that there is an emerging consensus in the literature on the significance of household consumption as a vital economic activity on which the welfare of the economy depends and constitutes a major share of the disposable income. It is also evident numerous studies have specifically assessed the influence of the different factors such as gender, age, family size, educational level and income on household food commodities consumption which include chicken, rice, fish, eggs and so on as well as household food consumption. However, to best of our knowledge no study has yet comprehensively examined the dynamics of the entirety of household consumption pattern in Federal Capital Territory (FCT) Abuja vis-à-vis its determinants. Thus, it is against this backdrop this study intends to fill the gap by examining the entirety of household consumption pattern of FCT residents as well as introducing some variables such as employment status of household members, religion, hike in prices of commodities and services to ascertain the household consumption pattern of the residents.

METHODOLOGY

The Quantitative Research Method

The quantitative research method (QRM) was used in this investigation. According to Aliaga and Gunderson (2002), QRM entails gathering numerical data and using statistical techniques to analyze it in order to shed light on a problem or phenomenon. Furthermore, Williams (2011) stated that QRM includes gathering measurable data and applying statistical analysis to it in order to validate or invalidate competing knowledge assertions. Moreover, Williams (2011) noted that QRM can be inductive, deductive, or abductive (combining the states of inductive and deductive) in nature because it starts with the formulation of a research problem, the generation of hypotheses or research questions, a review of relevant literature, and a quantitative analysis of data. By the way, the deductive research approach was used in this work.

Area of Study

The study area covers three selected area councils, namely Abuja Municipal Area Council (AMAC) is located in the central part of the Federal Capital Territory (FCT), housing the capital city, Abuja. It covers an area of approximately 1,769 square kilometers and has a diverse and cosmopolitan population. The area includes a significant presence of expatriates, government officials, and professionals. The primary economic activities in AMAC include administration, commerce, services, and tourism. The infrastructure is well-developed, with numerous government institutions and offices, embassies, and high-end commercial centers. Major markets in the area include Wuse Market, Nyanya Market, Garki Market, and Utako Market. AMAC hosts numerous educational institutions ranging from primary to tertiary levels. The healthcare system is well-equipped with hospitals and clinics such as the National Hospital and various specialized medical centers. Cultural sites in AMAC include the Nigerian National Mosque, Nigerian National Christian Centre, and Millennium Park. Recreational facilities abound, with parks, shopping malls, cinemas, and sports facilities available for residents and visitors.

 Bwari Area Council is located northwest of Abuja, bordering Niger State. It covers an area of approximately 914 square kilometers and has a population comprising both urban and rural communities, with indigenous ethnic groups such as the Gwaris. The economy of Bwari is driven by agriculture, trading, and education. Prominent markets include Bwari Market and Dutse Market. Bwari is home to major educational institutions like the Nigerian Law School and Veritas University Abuja. The healthcare system consists of a mix of public and private health facilities, although it is less advanced than that of AMAC. Cultural life in Bwari includes traditional festivals and events, particularly those of the Gwari people. Recreational facilities include community parks and local recreational centers.

Kwali Area Council is located southwest of the FCT, covering an area of approximately 1,206 square kilometers. It has a predominantly rural population with diverse ethnic groups, including the Gwari and other indigenous peoples. The economy of Kwali is primarily based on agriculture, with notable activities including yam, cassava, maize, and millet farming. Pottery and small-scale trading are also significant. The key market in the area is Kwali Market. Educational facilities in Kwali are limited compared to AMAC and Bwari, with some primary and secondary schools and fewer tertiary institutions. Healthcare services include basic primary health centers and a few hospitals. Kwali is known for its traditional pottery, with local artisans producing widely recognized works. Recreational facilities are limited, focusing more on natural attractions and community-based events.

Population of Study, Sample Size and Sampling Procedure

The population under investigation comprises the Abuja Municipal Area Council (AMAC), Bwari, and Kwali Area councils, with respective populations of approximately 778,567, 227,216, and 85,837 (Soluap, 2023). Owing to the study’s use of the quantitative research method, which provided a large data supply with flexibility. A random sample technique was used in this study. Given the population size (N) and the margin of error (e) for each of the three area councils under investigation, the sample sizes (n) were determined using Slovin’s (1960) formula. Here is how the formula is expressed:

Slovin’s (1960) formula was adopted primarily for two reasons: first, to ensure that the sample size is sufficiently large to accurately reflect the population such that the sampling statistic and the population parameter are equal; and second, to ensure that every resident is accurately represented in the population. The following formulas were used to calculate the sample sizes for the three area council correspondents:

Therefore, a total of 1,197 residents were used as the study sample size for this research.

Instrument of Data Collection and Pre-Test of Instrument

The instrument for gathering data was a well-organized questionnaire. The majority of the items on the structured questionnaire are closed-ended. At each of the local councils, respondents were given the questionnaires at random. The questions were designed in a way that provided responses to the study questions. A series of inquiries was designed to address a specific research inquiry. Fifty participants who were purposefully recruited from the population participated in a pilot study aimed at evaluating the validity and reliability of the instrument. The respondents were given the questionnaires at random to complete. Cogency was found in all 56 test items according to the validity test results. The reliability (consistency) test results for the valid 56-items are shown in Table 3.1 below.

Table 3.1: Reliability Statistics

The Cronbach’s Alpha from Table 3.1 above is 0.901, indicating a high degree of internal consistency. As a result, the study’s items are legitimate and quite reliable.

Method of Data Analysis

SPSS (Statistical Package for Social Sciences) version 23 was used to enter, code, and analyze the obtained data. Inferential and descriptive analysis techniques are used in the study. Inferential analysis uses the chi-square analytic approach, whereas descriptive analysis uses charts, cross-tabulations, percentages, and frequencies.

Chi-square Analysis Technique

The chi-square analytic method (a non-parametric test) is used to assess the significance of the respondents’ views as well as testing for association between set of variables. The Chi-square statistic is stated as follow:

EMPIRICAL RESULTS

Background Assessments of the Respondents

Here is a presentation and discussion of the research participants’ demographic data. The respondents’ residential areas are displayed in Fig 4.1. As can be seen from the image, the respondents to the survey were residents of the Abuja Municipal Area Councils (AMAC) Kwali, and Bwari.

Fig 4.1. Areas of Residence of Respondents

The majority of respondents (68%, n = 809) were male, and nearly half (49%, n = 551) were between the ages of 18 and 35, while (50%, n = 597), were older than 35. These findings are shown in the table. According to the table, the majority of graduates (60%, n = 709) had an HND or bachelor’s degree as their greatest level of education. The major ethnic groups in the nation, the Igbo, Hausa, and Yoruba tribes, were also reasonably well represented in the survey, as were followers of Islam (43%, n=511) and Christianity (45%, n=542). Additionally, Table 4.1 shows that 686, or 59%, of the respondents were single- to four-(1-4) person families. Additionally, it demonstrates that most of the respondents had jobs, with a sizable portion (43%, n=493) working in the private sector. In conclusion, the table shows that 51% of the respondents, or 590 people, made between N100,000 and N300,000 each month. Thus, it can be inferred from the above that the respondents’ background evaluations show that they are suitable and possess the necessary qualities, and as a result, they have the adaptable necessary knowledge to offer the necessary replies to the study questions.

Table 4.1. Demographic Data of the Respondents

Source: Field Survey 2023

Assessment of Disposable Income and Its Effect on Consumption Pattern of the FCT Residents

The different streams of income for the respondent are shown in Fig. 4.2. The data indicates that a substantial minority of the respondents (30%) earn real estate income and/or withdraw money from bank deposits (40%) in addition to the majority (90%) who derive their disposable income from their monthly salaries. Therefore, it may be concluded that monthly salary is the respondents’ primary source of disposable money.

Fig 4.2. Respondent’s Source of Income

The Chi-square results clearly show a significant relationship (p-value = 0.000 < 0.05) between the levels of disposable income and spending patterns. The majority of respondents (74%) agreed that raising household income will have an impact on how they consume goods and services, and that doubling income at the same price will change what kinds of goods and services their households buy. It is evident that all (100%) low-income households would drastically alter their purchase patterns in response to a rise in disposable income.

Table 4.2. Assessment of the Association between Respondents’ Income Level and Consumption Pattern

H₀: Disposable Income Level is Independent of Consumption Pattern

Note: * denotes rejection of H₀ at 0.05 significant level

Source: Researchers’ compilations from IBM-SPSS 23 Outputs

Comparably, 96% of low-income households will drastically change the kinds of goods and services they purchase if their income doubles while prices stay the same. These findings suggest that low-income households are more likely to modify their consumption patterns or the kinds of goods and services they purchase in response to changes in their income

Table 4.3. Assessment of the Association between Respondents’ Income Level and Durable Consumers Goods/ Wealth Acquisition Pattern

H₀: Disposable Income Level is Independent of Wealth Acquisition Pattern

Note: * denotes rejection of H₀ at 0.05 significant level

Source: Researchers’ compilations from IBM-SPSS 23 Outputs

Table 4.3 also shows that there is significant association between respondents’ disposable income and the acquisition of durable household facilities.

More specifically, the findings prove the following: More respondents with high-income levels (67%) than others reported owning washing machines; more respondents with intermediate income levels (96%) than others reported owning refrigerators;

– Compared to other respondents, a larger percentage of those with high income levels (78%) owned cars;

– Compared to other respondents, a larger percentage (69%) of those with modest incomes had microwaves;

– Compared to other respondents, a larger percentage of those with high income levels (91%) had computers; and

– Compared to other respondents, a higher percentage of those with high income levels (88%) owned jewelry.

Therefore, in comparison to those with low incomes, these results demonstrate that those with moderate to high incomes were able to easily purchase more wealth items and durable consumer goods. From this, it follows that acquiring or buying durable consumer goods to improve one’s quality of life depends only on raising one’s disposable income. The lack of a consumer credit system makes it impossible for lower-income households to buy household appliances on a hire-purchase basis. Furthermore, a greater percentage of respondents with low incomes (58%) live in low density areas, a higher percentage of respondents with moderate incomes (54%) live in medium density areas, and a higher percentage of respondents with high incomes (51%) live in high density areas. In a similar vein, the table reveals that 44% of respondents with high incomes live in 3-bedroom homes, 35% in 4-bedroom homes, and 32% in 1-bedroom homes, correspondingly, for low- and moderate-income respondents. It follows that the respondents’ choice of housing type and location of living rely on their disposable income.

Assessment of the Influence of Family Size on the Consumption Pattern of the FCT Residents

Fig 4.3. General View on Family Size Influence on Household Consumption Pattern

The general opinions of the respondents regarding whether household size affects consumption patterns are shown in Fig. 4.3. As seen in the figure, the majority of respondents (80%) agreed that a household’s size affects its purchasing patterns. Figure 4.4 illustrates that a majority of respondents concurred that the number of children (Strongly Agree=50% & Agree=30%) and spouses (Strongly Agree=52% & Agree=32%) influence consumption pattern. The bulk of respondents so agreed that household consumption patterns are influenced by family size, including the number of spouses, children, and extended family members.

Fig 4.4. Assessing No of Spouses, Children and Extended Family Members and Household Consumption Pattern

Following that, Table 4.4 displays the evaluation outcomes of the participants’ views regarding the independent impact of family size on household consumption patterns (shown in Figures 4.3 and 4.4). It is evident from the Chi-square p-values (i.e., 0.000 < 0.05) that the null hypothesis for each of the four categories of respondents’ perceptions is rejected, that the respondents’ perceptions of how family size affects household consumption patterns depend on the size of their own households. In other words, the data clearly demonstrate that a larger percentage of respondents with families larger than eight individuals typically acknowledged that family size affects household purchasing patterns (100%).

Table 4.4. Assessment of the Respondents Perceptions on Influences of No of Spouse, Children and Extended Family Members on Household Consumption Pattern Based on their Size of Household

H₀: Respondents’ Perceptions on Influences of No of Spouse, Children and Extended Family Members on Household Consumption Pattern is Independent of their Household Size

Note: * denotes rejection of H₀ at 0.05 significant level

Source: Researchers’ compilations from IBM-SPSS 23 Outputs

Additionally, a greater percentage of respondents whose families had more than eight individuals stated that their consumption pattern was highly influenced by the number of spouses (100%), children (100%) and extended family members (100%) in particular.

Table 4.5. Assessment of the Association between Respondents’ Household Size and Wealth Acquisition Pattern

H₀: Household Size is Independent of Wealth Acquisition Pattern

Note: * denotes rejection of H₀ at 0.05 significant level

Source: Researchers’ compilations from IBM-SPSS 23 Outputs

These data thus show that the idea that household size—including the number of spouses, children, and extended family members—influences household spending patterns is predicated on household size. Furthermore, data in Table 4.5 indicates that household size has an impact on jewelry and durable consumer goods purchases made by households. In specific terms, the findings indicate that a greater percentage of participants having a family size of 5-8 individuals purchase more jewelry (74%), washing machines (72%), and microwaves (83%). Additionally, more responders who have a family size of more than eight buy more cars (100%) and computers (100%). Furthermore, a greater percentage of respondents who have families of between five and eight members (100%) and more than eight members (100%) purchase more refrigerators. Thus, it can be concluded that households with 5-8 persons and more than 8 members acquired washing machines, refrigerators, microwaves, cars, laptops, and jewelry. In addition, Table 4.5 shows that a higher proportion of households with more than eight members reside in apartments with three bedrooms (44%) and four bedrooms (56%). By comparison, 23% and 36% of households with one to four people reside in apartments with one or two bedrooms, respectively. Accordingly, the results imply that the kind of dwelling is determined by the size of the household, that is, the size of the apartment the household lives in is determined by the size of the household.

Assessment of Family Members’ Employment Status on FCT Residents’ Household Consumption Pattern

The respondents’ general opinions regarding the impact of a family member’s employment status on consumption patterns are shown in Fig. 4.5. The majority of respondents (72%) agreed that the job status of family members affects household purchasing patterns.

Fig 4.5. General View of on Family Members Employment Status Influence Household Consumption Pattern

Additionally, Fig. 4.6 shows a descriptive assessment chart that illustrates how the work status of the mother, father, and children affects the household’s spending pattern. The majority of respondents (86%; Strongly Agree=58%, Agree=28%) agreed that a father’s employment level affects his family’s consumption pattern. Furthermore, as shown in Fig. 4.6, the majority of respondents (73%; Strongly Agree=52%, Agree=21%) agreed that mothers’ work level influenced their purchasing pattern. Furthermore, slightly more than half of the respondents (56%), Agree (19%), and Strongly Agree (37%) agreed that children’s employment status affects their purchasing patterns. Thus, it can be concluded that the work position of the father, mother, and children influenced the pattern of household spending; however, the degree to which they admitted this differed depending on the father, mother, and children. For example, more respondents (86%) acknowledged that the job position of dads affects household spending more than that of mothers (73%) and children (56%). This suggests that the employment position of dads was thought to have a greater impact on household spending than the employment status of mothers and children.

Fig 4.6. Assessing Influence of Father, Mother and Children Employment Status on Household Consumption Pattern

Furthermore, Table 4.6 presents the results of respondents’ opinion on the effect of employment status on household’s acquisition of durable consumer products and jewelry. The Chi-square p-values (i.e. 0.000 < 0.05) connote rejection of the null hypothesis that employment status is independent of wealth acquisition pattern, hence house wealth is influenced by employment status.

Table 4.6. Influence of Respondents’ Employment Status on Household Wealth Acquisition

H₀: Household-Member Employment Status is Independent of Wealth Acquisition Pattern

Note: * denotes rejection of H₀ at 0.05 significant level

Source: Researchers’ compilations from IBM-SPSS 23 Outputs

According to the findings, none of the respondents who were unemployed purchased a washing machine (100%), refrigerator (100%), car (100%), microwave (100%), or computer (100%). Nonetheless, all retired respondents reported having purchased jewelry. Therefore, by conclusively proving that households with retired or employed family members own more durable consumer goods—like refrigerators, washing machines, cars, and other items—than households with unemployed family members, these results further corroborate the findings that the employment status of family members’ influences household consumption patterns.

Assessment of Hike in Price of Goods and Services, Age of Household Members and Social Group Activities Influence on Consumption Pattern of the FCT Residents

Regarding the effects of price increases, the age of household members, and social club participation on household spending patterns. The bulk of respondents (82%) acknowledged that rising prices for products and services have an impact on household consumption patterns, as shown in Fig. 4.7. Furthermore, the majority of respondents (79%) acknowledged that household members’ ages have an impact on their spending habits. Furthermore, slightly more than half of the respondents (51%) said that social group activities do affect the patterns of household consumption. The age of home members, the rise in the price of goods and services, and social club activities all have an impact on household spending patterns. The responders’ agreement thresholds, however, differ greatly. More people concur that price increases affect household spending patterns than do membership age and social club activities.

Fig 4.7. General View of Hike in Price, Household-Members’ Age and Social Group Activities on Household Consumption Pattern

Fig 4.8. Respondents’ Perceptions on the Rise in Goods and Services Prices and Household Consumption Pattern Reaction

Consequently, in light of the well-established strong assumption that increases in the cost of goods and services impact household consumption patterns, Fig. 4.8 displays respondents’ opinions of potential household consumption scenarios in response to price increases for products and services. The majority of respondents acknowledged, as shown in the figure, that a significant increase in the cost of goods and services would force households to: reduce their consumption of luxury goods and services (Strongly-Agree=55%, Agree=32%), become more resourceful in their search for cost-effective alternatives, and reassess their spending priorities in favor of more essential goods and services (Strongly-Agree=40%, Agree=60%). Based on these findings, it can be concluded that a rise in the cost of products and services would lead households to look for more affordable options and reassess their spending priorities by reducing their consumption of luxury and less necessary goods and services.

Fig 4.9. Respondents’ Perceptions on the Household-Members Age and Household Consumption Pattern

Regarding the majority of respondents’ assumptions that the age of household members affects consumption patterns (refer to Fig. 4.7). The respondents’ opinions regarding how a household member’s age affects their spending patterns are shown in Fig. 4.9. The majority of respondents agreed, based on the results, that consumption patterns are influenced by the age of family members (60%; Strongly-Agree=26%, Agree=34%) and spouses (77%; Strongly-Agree=43%, Agree=34%). The majority of respondents also concurred that the age of children affects the consumption patterns of households (82%; Strongly-Agree=46%, Agree= 36%). Thus, the age of the spouse, the age of the kids, and the age of elderly family members all affect the consumption patterns inside the household. The respondents’ agreement levels, however, differ greatly on different scales. For example, compared to others, a larger percentage of respondents concur that the age of children affects household purchasing patterns. In conclusion, somewhat more than 50% of participants concur that social group activities impact their patterns of consumption (refer to Fig. 4.7). The respondents’ opinions on how particular social groups’ activities affect consumption patterns are shown in Fig. 4.10. The figure indicates that slightly more than one-third of the participants acknowledged that household consumption patterns are influenced by religion (38%; Strongly-Agree=24%, Agree=14%), cultural affiliation (39%; Strongly-Agree=20%, Agree=19%), friends, and neighborhood affiliation (36%; Strongly-Agree=19%, Agree=17%). It follows that the majority of survey participants do not believe that social group activities—specifically, religious, cultural, friend, and neighborhood affiliations—have an impact on household spending patterns.

Fig 4.10. Respondents’ Perceptions on Specific Social Groups and Household Consumption Pattern

DISCUSSION

The study found that the respondents’ monthly salaries constituted the largest source of their disposable income, with real estate and bank deposits also contributing significantly. The study has shown a strong correlation between respondents’ discretionary income and their household’s consumption habits. The results showed that those with low disposable income are far more likely to change the kind of goods and services their household consumes or to enhance household consumption patterns in response to a small increase in disposable income (see Table 4.2). The empirical results then demonstrated that the type of accommodation and density of the residential area are highly dependent upon the disposable income level of an individual (refer to Table 4.3). In a similar vein, those with high and moderate incomes owned more jewelry and durable goods than those with low incomes (see Table 4.3). This basically means that a person’s disposable income has a big impact on the kind of home they live in, the neighborhood they live in, and the amount of real estate they buy. Therefore, an individual’s prior disposable income in FCT has a major impact on their place of residence, how they accumulate wealth, and how they generally consume as a household. This result is in line with research by Hone and Marisennayya (2019), Ojogho and Imade (2020), and Okoronkwo et al., (2020), which found that household income influences household consumption. On the assessment of the influence of family size on consumption pattern, majority of the respondents acknowledge that family size influences household consumption pattern (see Fig 4.3). Majority of the respondents opine that family size such as number of spouse(s), children and extended family member’s influences household consumption pattern (see Fig 4.4 and Table 4.4). Also, the results established that more acquisition of washing machines, refrigerators, microwaves, vehicles, computers and jewelries were significantly high among household with 5-8members and above 8-members. Likewise, the study showed that the house-type of an individual significantly depend on the household size (see Table 4.5). Thus, the aforementioned findings established that family size such as number of spouse, children and extended family members significantly influence household consumption pattern in terms of wealth acquisition and the choice of house-type. The results here are similar to those of Okoronkwo et al., (2020), who found that household size significantly influenced the way that several staple foods were consumed in Bende Local Government Area, Abia State. The study also found that consumption patterns were influenced by the work status of family members. The analysis also revealed that fathers’ employment status was thought to have a greater impact on household consumption than that of mothers’ and kids’ employment status. This empirical finding, when compared to other pertinent studies like Obalola et al., (2021), Habanabakize (2021), and Acet (2021), uniquely established family members’ work status (especially the father’s) as one of the predictors of household consumption.

Finally, after analyzing how the age of household members, social club activities, and price increases affected household consumption patterns, the study discovered that a rise in the cost of goods and services significantly influenced households to look for more affordable options and reassess their spending priorities by cutting back on luxury and less necessary items. The study also discovered that the age of the spouse, the age of the children, and the age of elderly family members all had an impact on the pattern of household consumption; however, the age of the children was found to have a greater impact. This is due to the fact that children’s basic needs change as they get older.

On the other hand, the study discovered that household consumption patterns were not significantly influenced by social group activities, particularly those related to friends, neighbors, religion, or cultural affinity. Therefore, the empirical results showed that social group activities had little effect on household consumption, but price increases and the age of household members—especially the children—had a substantial impact on household consumption patterns. The empirical results are consistent with those of Habanabakize (2021), who discovered that pricing influences consumption patterns. In contrast, the empirical results showed that the age of household members—particularly the children—had a distinctive influence on the pattern of family spending when compared to other research like Salman et al., (2021), Obalola et al., (2021), Ojogho and Ojo (2021), and Ekong and Effiong (2020). This result indicates that the consumption patterns of households change with the age of the household’s children

CONCLUSION AND RECOMMENDATIONS

This paper evidently examined the determinants of household consumption pattern other than disposable income. Evidence from the background assessments of FCT respondents indicate that the study’s respondents were apt and have the requisite attributes and knowledge to provide the required responses to the research questions. The study concludes that the major sources of income of FCT residents include monthly salary, Bank Deposits and Real Estate Income. The residents’ disposable incomes influence the individual household’s consumption pattern. A slight increase in the disposable income of low-income households significantly increase their households’ consumption pattern or alter the type of commodities and services their household consume. The study therefore concludes that disposable income of an individual in FCT would significantly influence where the person lives, wealth acquisition and generally the household consumption pattern. The study also draws conclusion that family size such as number of spouses, children and extended family member’s influences household consumption pattern. Thus, the study concludes that a positive relationship exists between FCT residents’ family size and household consumption pattern. The study concludes that a positive relationship exists between employment status of FCT residents and household consumption pattern. More specifically the study concludes that household consumption pattern is greatly influence by fathers’ employment status. To sum up, this study concludes that a hike in price of goods and services caused household to seek for economical alternatives, re-evaluate spending priorities by cutting down on less essential items, luxury goods and services. In addition, it is concluded that household-members’ age (especially the children) significantly influence household consumption pattern while social group activities do not influence household consumption.

Recommendations

Based on the findings, the following are recommended:

1. Given the positive impact of income on household consumption patterns, there is a need for strategies to enhance income levels among residents in the Federal Capital Territory (FCT), Abuja. Policymakers should focus on promoting economic opportunities, skill development programs, and job creation initiatives to empower households economically. This may include targeted interventions to support entrepreneurship, vocational training, and education to uplift the earning capacity of residents.
2. Also credit system like higher purchase system should be better organized so that low- income earners can gradually save towards acquisition of durable and life quality enhancing consumer goods
3. Recognizing the relationship between price hikes and household consumption, it is crucial to implement measures to mitigate the impact of rising prices on residents. Policymakers should explore avenues for price stabilization mechanisms, such as effective price control policies, subsidies for essential commodities, and strategies to enhance market competition. Additionally, financial literacy programs can empower households to make informed purchasing decisions during periods of price volatility, ensuring responsible consumption practices.
4. Acknowledging the positive influence of family size on household consumption patterns, there is an opportunity to implement family planning and education programs. Encouraging family planning practices can empower individuals to make informed decisions about family size, which, in turn, can positively impact consumption patterns. Educational initiatives should emphasize the importance of family planning, provide access to reproductive health services, and promote awareness about the economic implications of family size on household resources. By investing in education and family planning, policymakers can contribute to sustainable consumption patterns aligned with the economic capacities of households in the FCT.
5. Mortgage finance mechanism should be restructured and extended to artisans and other self-employed individuals to facilitate acquisition of houses in well planned medium density areas to improve the quality of life of residents of the FCT.

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