Financial Behavior Analyses: Engel's Law in the Modern Domestic Economy of the City of Goma

Ildephonse Sindayigaya ()
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Ildephonse Sindayigaya: ECODOC - Ecole doctorale de l'Université du Burundi, Université Lumière de Bujumbura

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Abstract: This research examines the financial behavior of households in Goma, applying Engel's Law. This states that the share of income dedicated to food decreases as income increases, thus freeing resources for other expenses. The results show that, in Goma, households follow this dynamic. As income increases, the proportion of the budget for food decreases, allowing for increased spending on education and other priorities. Notably, education spending often increases at the expense of housing spending, indicating a priority for education over immediate material comfort. Household size also influences housing expenditure per person, illustrating economies of scale where costs are spread across more members. This observation is consistent with Engel's Law, which explores the relationship between household size and individual spending. The results also show a positive coefficient between income and savings, suggesting that higher-income households save more, which is consistent with Engel's Law. In contrast, a negative coefficient between consumption and saving indicates that increased consumer spending reduces saving capacity, aligned with Engel's principles

Keywords: household revenue; domestic economy; DR-Congo; Financial behavior; Finance (search for similar items in EconPapers)
Date: 2024-11-11
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Published in The International Journal of Scientific Research and Management, 2024, 7 (11), pp.197-212. ⟨10.37502/IJSMR.2024.71118⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05388741

DOI: 10.37502/IJSMR.2024.71118

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