ASSESSING THE VALIDITY OF ABSOLUTE INCOME HYPOTHESIS IN SOUTH PUNJAB
Keywords:
Consumption, Absolute income, Cross Section Data, OLS, South PunjabAbstract
The study investigates the consumption patterns in South Punjab, focusing on the Keynesian Absolute Income Hypothesis (AIH). Utilizing cross-sectional household data from Bahawalpur, Multan, and D.G. Khan divisions during the period 2022-2023. The present study examines the relationship between income and consumption, along with socioeconomic factors influencing consumer behavior. The Ordinary Least Squares (OLS) regression method is employed to estimate consumption correlates. The findings reveal a strong positive correlation between household income and consumption, consistent with Keynes' AIH. The results also provide the validity of Keynsian consumption hypothesis in south Punjab based on budget study data. Additionally, significant impact of age, education, gender, location, number of earners, and value of assets on consumption patterns are highlighted. Urban, wealthier, and higher-educated households exhibit higher consumption levels, with gender and marital status also influencing household consumption behavior. These results underscore the need for targeted policy interventions, such as income support programs, education and skill development, gender equality initiatives, and efforts to bridge urban-rural disparities. This study contributes to the literature by providing detailed insights into consumption determinants in a specific regional context.
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