EMPIRICAL MODEL FOR EAST COAST OF PENINSULAR MALAYSIA HOUSEHOLD EXPENDITURE: IntroductionIn development plan provision society, household spending pattern were important in order to understand society standard of living. To fulfill the basic need like food, clothing, accommodation and so on, each household’s must be efficient in managing their needs parallel to their income level. Based on reported by Van Raaij & Henk J. Gianotten, household income and attitude and expectation determine consumer expenditure, saving and credit at the aggregate level. Economic growth in Malaysia had increased the income level by the household, however with changing global economy have resulted with inflation and increase in family expenses. Malaysian had just experienced increases in food and petroleum prices therefore, it is important to understand how far they spend their money wisely in a situation of global economic changes.
As far as inflationary pressure affect to family expense, the Consumer Price Index (CPI) has shown that food expenditure change as much as 33.6% from year 1974 to October 1980. While, Mohd Nor, reported that 25% from the respondent find out that their standard of living has decreased relatively five years ago. Apart of that, household tends to make an adjustment to their income and expenditures to fulfill their needs during the economic crisis or recession such as stagflation and the inflation Leon Zurawicki & Nestor Braidot. Stephen also disclosed with the same findings that changes in consumption and expenditure patterns occur due to changes of income level among the households. The objective of this study is to identify major components of household’s expenditure of the East Coast households as the percentage of total income in terms of food, education, health and to estimate an empirical two stage least square model for the household’s expenditure. The investigation by Statistics Department Malaysia in year 1973 and 1979 disclosed that on average the spending amount for Malay is RM214.66 while Chinese amounted to RM 421.42. It means that race Malay spend as much as 40.5% and Chinese spend as much as 34.4% for food. On the other hand, a study by Jariah Masud, reported that the spending patterns and budgeting practices of Malay and Chinese household in Kuala Lumpur showed that more that 50% of the 173 families investigated had income of less than RM600 per month. In comparison, Chinese families had larger incomes, spent more and saved more than their Malay counterparts. While, the credit buying patterns of two groups were similar although about a third of both groups never used credit.
The recession and fluctuation in economic condition normally cause the changes in socioeconomic and social dimension which are interrelated to the society as a whole. Changes in social dimension had exacerbated the social crisis in the economic community system. This statement was supported by Atsushi Maki, which reported that the saving pattern during crisis had changed immediately in accordance with individual household’s budget and thus influence the current asset pricing whereby the debtor had to bear with its new situation.