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Determinants of Total Consumption Expenditure in
Sudan: An Empirical Study, 1970-1994
Badreldin Mohamed Ahmed Abdulrahman
Department oI Economics, Faculty oI Economics and Social Studies, University oI
Zalingei, West DarIur, Sudan.
usbadryahoo.com or badrecogmail.com
Abstract:
The objective oI this paper is to examine empirically the determinants oI
total consumption expenditure in Sudan over the period 1970-1994.
Annual time series data has been used in the analysis to estimate a linear
Iorm oI the model Ior the period. Total consumption oI expenditure and
national income are the dependent variable and explanatory variable
respectively. The analysis coverage the period 1970-1994, where the data
were obtained Irom central bureau oI statistic. Using these data OLS
technique is applied to a linear Iorm oI the standard model. The result
indicates that the major determinant oI total consumption expenditure is
national income during the period under consideration.
='-' :
,-' _ `+--` _'= _'' '--` -=- ,-,-=-' =-' += - ,' -- --=
- --' `= 1970 - 1994 . -' -=-' .`-, _-,-' .=-' - --' ,- _---
`+--` _'= '--` _''-=` . -= ' -+' _''-= '--,- _-'- ,-- _-,-' .=-' ,
.---- ,-- `+--` _'= '--` . '-=`' -' '+=' - '-',-' --= -,=

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,-' ,,+-=- , =' --' .=- ,--'' ,== `= _,--- _ '-',-' ='- ---=--
,',-=` -' '--' -,= -=--'- . '- .`-, _-,-' .=-' _' --' =,--
' -=-' `+--` _'= _'' '--`' - .
1. Introduction:
Consumption is a common concept in economics, and gives rise to
derived concepts such as consumer debt. Generally consumption is
deIined by opposition to production. But the precise deIinition can vary
because diIIerent schools oI economists deIine production quite
diIIerently. According to some economists, only the Iinal purchase
oI goods and services constitutes consumption, and every other
commercial activity is some Iorm oI production. Other economists deIine
consumption much more broadly, as the aggregate oI all economic
activity that does not entail the design, production and marketing oI
goods and services (e.g. "the selection, adoption, use, disposal and
recycling oI goods and services").
Likewise, consumption can be measured by a variety oI
diIIerent metrics such as energy in energy economics . The
total consumer spending in an economy is generally calculated using
the consumption Iunction, a metric devised by John Maynard Keynes,
which simply takes the aggregate disposable income and multiplies it by
a "marginal propensity to consume". This metric essentially deIines
consumption as the part oI disposable income that does not go
into savings. But disposable income in turn can be deIined in a number oI
ways - e.g. to include borrowed Iunds or expenditures Irom savings.

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Studies oI consumption investigate how and why society and individuals
consume goods and services, and how this aIIects society and human
relationships. Contemporary studies Iocus on meanings oI goods, role oI
consumption in identity making, and the 'consumer' society (e.g. Douglas
et al.). Traditionally, consumption was seen as rather unimportant
compared to production, and the political and economic issues
surrounding it. With the development oI a consumer society, increasing
consumer power in the market place, the growth in marketing,
advertising, sophisticated consumers, ethical consumption etc, it is
recognized as central to modern liIe. Sociology oI consumption has
moved well beyond Thorstein Veblen's early work inconspicuous.
Current theories investigate the role oI economic and cultural Iactors in
constraining consumption (Bourdieu), as development oI an approach
that sees consumers as 'victims' oI producers and their social situation. A
counter theory highlights the subversive aspects oI consumption, with
consumers buying and using goods, places etc in ways unintended by the
producers. Examples include city squares turned to skateboard parks, and
music sharing on the internet.
Studies oI consumption come Irom a variety oI backgrounds. Consumer
studies attempt to help marketing. User research aims to improve product
design. Feminist studies highlight the importance oI women as
consumers, and particularly the role oI the domestic arena in
consumption. Media studies try to understand the consumption oI media
products such as television and video games. Cultural Studies is

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interested in the role oI material goods in culture (e.g. Mackay) Critical
Theory is an important inIluence on contemporary studies, as
consumption is central to contemporary culture. Domestication
theory Iocuses on mass market technologies.
Studying consumption can be done through traditional survey methods, or
various ethnographic techniques. Consumption studies are diIIicult
because they involve investigating everyday liIe situations, bringing
research into the private domain, rather than Iormalized settings such as
the workplace (wikapedia the Iree Encyclopedia, 2010).
Consumption creates the demand Ior something. Meanwhile once
demand is create supply is created. Supply is the manuIacturer oI the item
which is being consumed, or is in demand. That is basically how an
economy works Supply and demand.
Incomes and prices are seen as consumption's two major determinants.
The determinants are as Iollows:
1. Current disposable income
2. Relative income.
3. LiIe cycle income.
4. Wealth.
5. Price Level.
6. Rate oI Interest.
7. Expected Iuture income.
8. Others: advertisement, social saIety-net, availability or scarcity oI
loan, geographical location, weather etc.

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Objectives of the paper:
The objective oI this paper is to examine empirically the determinants
oI total consumption expenditure in Sudan. For this purpose a model is
speciIy with real consumption as the dependent variable, and national
income as explanatory variable. Ordinary least squares (OLS) is applied
to the model using annual time series data covering the period (1970-
1994).
The rest oI this paper is organized as Iollows. Section two brieIly
reviews the literature, while section three speciIies the model. Section
Iour reports the empirical results. The summary and concluding remarks
are given in section Iive.


2. Literature Review:
The behavioral economic concept oI unit price predicts that
consumption and response output (labor supply) are determined by the
unit price at which a good is available regardless oI the value oI the cost
and beneIit components oI the unit price ratio. Experiment 1 assessed 4
pigeons' consumption and response output at a range oI unit prices. In one
condition, Iood was available according to a range oI Iixed-ratio
schedules, whereas in the other condition, Iood was available according
to a range oI random-ratio schedules. Consistent with unit price
predictions, consumption and response output were approximately
equivalent across schedule types within the lower range oI unit prices.

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However, at Unit Prices 64 (ratio value 192) and greater, considerably
more consumption and response output were observed in the random-
ratio condition. Experiment 2 replicated these Iindings with 4 pigeons
using the rapid demand curve assay procedure that is commonly used in
the behavioral economics literature. Findings are integrated with two
mathematical models oI behavior under variable reinIorce delays
(Madden et al, 2005).
Consumption is normally the largest GDP component. Many
persons judge the economic perIormance oI their country mainly in terms
oI consumption level and dynamics.
According to Piano (2001), Consumption is the value oI goods and
services bought by people. Individual buying acts are aggregated over
time and space. He argued that, Iirst, consumption may be divided
according to the durability oI the purchased objects. In this vein, a broad
classiIication separates durable goods (as cars and television sets)
Irom non-durable goods (as Iood) and Irom services (as restaurant
expenditure). These three categories oIten show diIIerent paths oI growth.
Second, consumption is divided according to the needs it satisIies. People
in diIIerent position in respect to income have systematically diIIerent
structures oI consumption. The rich spend more Ior each chapter in
absolute terms, but they spend a lower percentage in income Ior Iood and
other basic needs. The percentage values oI an aggregation over all the
households in a country can thus be used Ior judging income
distribution and the development level oI the society. The rich have both

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higher levels oI consumption and savings. In diIIerentiated product
markets, the rich can usually buy better goods than the poor. This
happens also because they tend to use diIIerent decision making rules. In
other words, consumption depends on social groups and their behaviors,
as well as their proneness to advertising. Third, Ior exactness' sake, one
should distinguish "consumption" as use oI goods and services Irom
"consumption expenditure" as buying acts. For durable goods this
diIIerence may be relevant, since they are used Ior long time periods.
Fourth, only newly produced goods enter into the deIinition oI
consumption, whereas the purchase oI, say, an old house is not
considered consumption, since it was already counted in the GDP oI the
year in which it was built.
Consumption oI animal source Iood has always been low and declining
as a result oI the low production and continuously growing population.
Ethiopia per-capita consumption in 2004 declined by more than 10
Irom an average oI 20 kg in 1961, in contrary, the average world meat
consumption Ior example doubled (quoted in FAO, 2005).
Current income is the most relevant determinant oI consumption. Income
comes Irom labor (employment and wages), capital (e.g. proIit leading to
dividends, rent, etc) and remittances Irom abroad. Cumulated savings in
the past can be squeezed in case oI necessity and give rise to a jump in
consumption, similarly with what happens with wealth increase, due Ior
instance to stock exchange boom or house prices boom. Expectations on

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Iuture income, especially iI concerning short-term credible events, may
also play an important role (Piano, 2001).
According to age oI the decision-maker, individual and household
consumption varies, both in values and composition. Thus, aggregate
consumption may be inIluenced by demographic Iactors, such as an older
and older population, even though one should not rely too much on these
relationships since demographic variables are extremely slow in changes,
whereas consumption clearly reacts to economic climate. Other things
equal, a higher price level (inIlation) reduces the real current income, thus
real consumption. A GDP component as it is, consumption has an
immediate impact on it. An increase oI consumption raises GDP by the
same amount, other things equal. Moreover, since current income (GDP)
is an important determinant oI consumption, the increase oI income will
be Iollowed by a Iurther rise in consumption: a loop has been triggered
between consumption and income. An autonomous increase oI
consumption, iI at the same level oI income, would reduce savings, but
the positive loop just described (known as the "Keynesian multiplier")
will imply an increase oI income level with a positive impact on Iuture
savings.
Per capita consumption rates in China are still about 11 times below
ours, but lets suppose they rise to our level. Lets also make things easy
by imagining that nothing else happens to increase world consumption
that is, no other country increases its consumption, all national
populations (including Chinas) remain unchanged and immigration

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ceases. Chinas catching up alone would roughly double world
consumption rates. Oil consumption would increase by 106 percent, Ior
instance, and world metal consumption by 94 percent.( New York Times,
Jan, 2008).
Absolute income, liIecycle, permanent income and relative have been
the most variables that compound the consumption model in Sudan
during the period 1960-2000.(quoted in Elzibair,2007).
3. The Model and Research Methodology:
In this section we speciIy an empirical model and outline the research
methodology that will be adopted in the analysis. The model takes the
Iollowing Iorm:
C I(Y), I1~ 0, (1)
Where:
C: total consumption Expenditure.
Y: national income
According to economic theory, national income (y) and prices oI goods
are the main determinants oI consumption expenditure. But in this paper
we used the national income as the only determinant oI total consumption
expenditure oI good and services in Sudan. Thus we supposed that

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national income has been played a key role in explanting oI consumption
expenditure and determining oI it.
We adopt ordinary least squares technique to the data covering the period
1970-1994. The data are collected Irom the central bureau oI statistics in
republic oI Sudan.
So it is important to note that the Iinal consumption expenditure
(Iormerly total consumption) is the sum oI household Iinal consumption
expenditure (private consumption) and general government Iinal
consumption expenditure (general government consumption).
The empirical result oI the study is shown in next section.
4. The Empirical Results:
Applying ordinary least squares method to the data covering the
period (1980-2005) on the variables mentioned above, we estimated a
linear Iorm oI equation (1). The regression results are given in equation
(2) below, where the Iigures inside the brackets are t-ratios oI the
estimated parameters.
C 2.263 Y (2)
(102.016)
R
2
0.998 F 10407.304 DW 2.597

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Equation (2) is statistically signiIicant at the level 1 as indicated by the
(F) ratio. The value oI R
2
suggests that 99 oI the variation in
consumption expenditure (C) is explained by variation in national income
(Y), while the Durbin-Watson statistics indicates the absence oI serial
correlation in the model at the 1 level.
5. Conclusion:
This paper attempted to shows the determinants oI total consumption
expenditure in Sudan over the period 1970-1994. Annual time series data
has been used in the analysis to estimate a linear Iorm oI the model Ior
the period. Total consumption expenditure is chosen as dependent
variable, while national income represents the explanatory variables. Data
Ior the study were obtained Irom central bureau oI statistics in republic oI
Sudan. Using these data OLS method is applied to the model. The
empirical result provides evidence that national income is the major
determinant oI consumption expenditure during the study period.






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Reference:
1. Bertu, S and H. Kawashima: "Pattern and Determinants oI Meat
Consumption in Urban and Rural Ethiopia".
2. Elzibair, M. M. (2007): "Consumption Function Estimation Ior Sudan
(1960-2000): unpublished M.Sc, Department oI Economic, University
oI Khartoum, Khartoum, Sudan.
3. Madden, G.J (etal) (2005). "Labor Supply and Consumption oI Iood
in closed Economy under a range oI Iix- and random ratio schedules:
test oI unit price", Journal oI Experimental Analysis oI Behavior
(JEAP).
4. New York daily news paper, Jan, 2008.
5. Piano, V. (2001), '' Consumption". Economic Web Institute
6. Wekipedia, the Iree encyclopedia.












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Appendices:
Table (A.1):
National Income (Y) in Sudan, 1970-1994.

Y Year
593.8 1970
702.0 1971
830.7 1972
1130.4 1973
1370.5 1974
1672.1 1975
2119.7 1976
2617.4 1977
3083.8 1978
3892.9 1979
4807.9 1980
6221.0 1981
8408.5 1982
10214.9 1983
13561.9 1984

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17803.3 1985
33167.5 1986
42463.7 1987
76615.1 1988
101720.7 1989
178336.5 1990
396304.0 1991
886656.0 1992
1736976.0 1993
3828565.4 1994

Source: Central Bureau oI Statistics


Table (A.2):
Total Consumption Expenditure (C) in Sudan 1970-1994.
C Year
496.5 1970
559.5 1971
684.3 1972
776.5 1973
1026.5 1974
1378.5 1975
1576.7 1976

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2105.3 1977
2710.1 1978
3012.8 1979
3981.9 1980
5152.8 1981
6458.0 1982
9445.9 1983
11073.5 1984
15947.0 1985
19362.5 1986
32552.4 1987
41489.6 1988
74217.3 1989
101233.1 1990
174169.4 1991
362764.4 1992
836743.0 1993
1660369.0 1994
Source: Central Bureau oI Statistics





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Regression:

Variables Entered/Removed (b,c)
Model
Variables
Entered
Variables
Removed Method
1 y(a) . Enter
a All requested variables entered.
b Dependent Variable: c
c Linear Regression through the Origin
Model Summary(c,d)

Model R
R
Square(a)
Adjusted
R Square
Std. Error of
the Estimate
Durbin-
Watson
1 .999(b) .998 .998 42305.99527 2.597
a For regression through the origin (the no-intercept model), R
Square measures the proportion of the variability in the dependent
variable about the origin explained by regression. This CANNOT
be compared to R Square for models which include an intercept.
b Predictors: y
c Dependent Variable: c
d Linear Regression through the Origin


Variables Entered/Removed (b,c)

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Model
Variables
Entered
Variables
Removed Method
1 y(a) . Enter
a All requested variables entered.
b Dependent Variable: c
c Linear Regression through the Origin


ANOVA(c,d)

Model
Sum of
Squares df Mean Square F Sig.
1 Regression 186269646084
83.460
1
1862696460848
3.460
10407.304 .000(a)
Residual 42955133666.0
07
24 1789797236.084
Total 186699197421
49.460(b)
25
a Predictors: y
b This total sum of squares is not corrected for the constant
because the constant is zero for regression through the origin.
c Dependent Variable: c
d Linear Regression through the Origin

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Coefficients(a,b)

Model
Unstandardized
Coefficients
Standardized
Coefficients t Sig.
B
Std.
Error Beta
1 y 2.263 .022 .999 102.016 .000
a Dependent Variable: c
b Linear Regression through the Origin


Residuals Statistics(a,b)

Minimum Maximum Mean Std. Deviation N
Predicted Value
1123.4036
3756827.0
000
304940.0728 824172.65101 25
Residual -
156277.00
000
71738.515
63
-10546.64482 40913.70020 25
Std. Predicted
Value
-.369 4.188 .000 1.000 25
Std. Residual -3.694 1.696 -.249 .967 25

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a Dependent Variable: c
b Linear Regression through the Origin










Regression



Variables Entered/Removed(b)

Model
Variables
Entered
Variables
Removed Method
1 y(a) . Enter
a All requested variables entered.
b Dependent Variable: c



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Model Summary



Model R
R
Square
Adjuste
d R
Square
Std. Error
oI the
Estimate Change Statistics

R
Square
Change
F
Change dI1 dI2
Sig. F

1
.999(a) .998 .997
41586.89
070
.998
9519.3
67
1 23
a Predictors: (Constant),
ANOVA(b)

Model
Sum oI
Squares dI
Mean
Square F Sig.
1 Regressi
on
164634
546829
19.200
1
16463454
682919.2
00
9519.3
67
.000(a)
Residual 397777
97990.
23
17294694
77.848


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492
Total 165032
324809
09.690
24
a Predictors: (Constant), y
b Dependent Variable:














Coefficients(a)

Model
Unstandardized
CoeIIicients
Standardiz
ed t Sig.

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CoeIIicient
s
B
Std.
Error Beta
1 (Consta
nt)
-
12050.
603
8890.6
53
-1.355 .188
y 2.274 .023 .999 97.567 .000
a Dependent Variable: c