Household expenditure patterns in Kuwait

Abstract

Household expenditure is the second prominent component of GDP for Kuwait, consisting of 43% GDP, and it has been moderately growing for the past decade. It is essential to understand the nature of household expenditure, a fundamental macroeconomic driver with immense significance for policymaking. This paper utilises the latest Kuwait Household Expenditure Survey data to study household expenditure patterns in Kuwait. It examines and compares the variation of household expenditure patterns for nationals (Kuwaitis) and expatriate households over nine different major commodity groups. The paper investigates the patterns of household expenditure and the response of their characteristics on the level of expenditure by employing Heckman two-step estimation method. The results suggest that different factors affect the probability of consuming a commodity and the level of expenditure between the two household groups. Kuwaiti’s expenditure is more responsive to food, housing, communication and recreation commodities and less responsive to clothing, health, transportation and restaurants than expatriates. In general, there is a significant variation of expenditure patterns across all commodities between the two household groups.