Consumption Pattern of Households in Pakistan: Evidence from PSLM Data

Abstract

The study examines the consumption pattern of urban-rural sectors across four provinces of Pakistan, using PSLM data of 2013-14. The study estimates household elasticities w.r.t total expenditures and household size. The separate estimates for whole Pakistan, for each province, for both sectors, and for three income groups are attained by employing double logarithmic form of Engel function. The estimates present that different consumption patterns are exhibited by several income groups, different regions, and sectors. And when the incomes change the consumption expenditures also change both in terms of quantity and quality. Moreover, the Engel’s law and existence of economies of scale is confirmed for most of the commodity groups. However, the empirical evidences for Baluchistan and some households of Punjab are differing from theoretical predictions. The expenditures on food items fall as the size of family increased i.e. Deaton-Paxson puzzle.