Factors Affecting Spending Behavior among Undergraduates: Multivariate Tobit Model Approach

Abstract

The aim of this study is to identify the factors affecting the various spending behavior among undergraduates in University of Vavuniya. The primary data were gathered through online interface which was conducted during the period of May -June 2025 among the1226 students registered in the first, second, third- and fourth year students of faculty of business studies, University of Vavuniya. And 106 students were selected using stratified random sampling method. Monthly expenditures of the undergraduates for different items were categorized as food, travelling and communication were taken as dependent variable while gender, receive of other income sources, number of family members, parents’ income per month, distance between the hometown and university, and the mode of transport were taken as independent variables in the study. Data were analyzed using frequency, descriptive statistics, independent samples t-test and Multivariate Tobit regression model. Results of frequency revealed that among the students 87.7% of them are females and 12.3% of them are males whereas only 12.3% of them receives income from other sources and rest of the 87.7% of them do not receive it. Among the three categories of expenditures, average expenditure for food is the highest and the lowest cost for the communication. Spending behavior across gender revealed that, expenditures of food and communication for males are higher than females but, travelling expenditures for females is higher than males. Independent samples t –test showed that, there is a mean difference in food expenditure across male and female students whereas, travelling and communication expenditures are the same between them. Multivariate Tobit regression revealed that, gender and receive of other income sources are the major factors in determining the food expenditures while travelling expenditures were determined by the mode of transport. Andreceive of other income sources is an important factor to determine the communication expenditure in the study. The results of this study will be useful for students to understand and manage their various expenditures in a proper way.