Living Style and Cost of Living: A Cross-Section Analysis of B40 Households in Malaysia

Abstract

The cost of living has become an economic problem for everyone. Studies on the cost of living often connect income and inflation as the cost of living factors. This study aims to look from a different perspective by analysing the influence of lifestyle on the household cost of living in Malaysia. Lifestyle changes are one effect that arises from changes in household income and living standards. Households’ arrangement of upgrading basic needs by consuming more expensive and better-quality goods is defined as lifestyle and it is determined using household income elasticities. This study uses the Malaysian Household Expenditure Survey (HES) 2016 data. Engel’s Curve theory is applied to explain the relationship of household expenditure across income groups. Using the OLS regression model, income and expenditure elasticities are estimated. This study discovered that households had an increased rate of expenditure on basic needs more than income increases and we conclude that lifestyle affects the cost of living. Transportation expenditures represent the most significant lifestyle change influencing the cost of living among B40 households. Based on the findings, the researchers suggest that the government encourage a sustainable lifestyle based on specific expenditure groups to control household living costs.