The Economics of Everyday Life: Unpacking Household Spending in Anuradhapura District, Sri Lanka

Abstract

Household expenditure patterns are crucial to economic stability, shaping aggregate demand and overall welfare. This study investigates the key determinants of household consumption expenditure in the Anuradhapura District, Sri Lanka, using data from 100 purposively selected households. It examines the influence of demographic and socio-economic factors - such as income, family size, education level, household head’s age, gender, occupation, and geographic location - on spending behavior. Employing descriptive statistics, correlation analysis, and multiple linear regression models, the study identifies income as the most significant determinant of household expenditure. The regression results indicate that a one-unit increase in household income leads to a 5.61-unit rise in expenditure. Other factors, including family size, education level, geographic location, and land ownership, also exhibit significant positive relationships with household spending. Conversely, age has no significant effect, while gender influences specific spending patterns, with male-headed households tending to allocate more toward discretionary expenses. The model accounts for approximately 62.5% of the variation in household expenditure, reinforcing the strong impact of these determinants. Additionally, urban households exhibit higher spending levels than their rural counterparts, reflecting differences in service accessibility and cost structures. The findings underscore the importance of policy interventions to enhance household economic conditions. Key recommendations include increasing disposable income, improving educational access, fostering employment opportunities, and promoting agricultural productivity. Addressing land ownership disparities is also essential to reducing income inequality and strengthening economic resilience. This study offers valuable insights for policymakers seeking to improve household financial stability and drive sustainable economic growth in Sri Lanka.