Relationship between consumption and household income in the district of Huánuco, department of Huánuco, Peru

Abstract

Objective. To determine the association between consumption and household income in the district of Huánuco, department of Huánuco, Peru, during 2019. Methods. The research is applied, descriptive-correlational and has a non-experimental design. A structured survey questionnaire was used for data collection and was applied to a sample of 240 families. Based on this, a multivariate linear regression model was estimated, which is theoretically based on the Keynesian consumption function. Results. They are divided into two: (i) based on the descriptive-correlational statistical analysis it was found that for the year 2019 the levels of income and consumption expenditure were relatively low and high, respectively; and that these variables present a positive statistical association of 0.672; (iii) the estimation of the econometric model showed evidence of a positive effect of income on consumption expenditure, and a value of the marginal propensity to consume lower than unity (0.71). Conclusions. The relationship between consumption expenditure and household income in the district of Huánuco is positive, and the value of the estimated marginal propensity to consume indicates that about 67% of income is devoted to consumption and the rest to savings.