Socio-Economic Determinants of Household Food Expenditure in Malaysia: a Panel Analysis Across States and Time

Lee, Emily Le Yi (2026) Socio-Economic Determinants of Household Food Expenditure in Malaysia: a Panel Analysis Across States and Time. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study examines the socio-economic determinants of household food and beverages expenditure in Malaysia using a panel data approach across 13 states and three federal territories over selected years. The research addresses the need for policymakers and stakeholders to better understand consumption patterns amid rising living costs and regional disparities. Focusing on selected years, the study fills a gap in existing literature by incorporating both spatial and temporal dimensions of household expenditure. The analytical framework is based on panel data estimation techniques, with the Random Effects (RE) model employed to estimate long-run relationships, alongside Panel-Corrected Standard Errors (PCSE) for robustness. The model includes food expenditure as the dependent variable, while independent variable comprises income, urban and rural food expenditure, household size, and the Food Consumer Price Index (FCPI). The results indicate that income and urbanization exert significant and persistent effects on food expenditure supporting Engel’s Law. The findings also reveal notable variations across states, reflecting regional heterogeneity in consumption behavior. By highlighting the importance of food expenditure determinants, this study contributes to the literature on consumption economics and provides insights for designing targeted policies to improve food security and reduce inequality in Malaysia