Estimation of the Household Consumption Function under Globalization: A Field Study on Libyan Households in Misurata City

Abstract

This study aims to investigate the impact of globalization on household consumption expenditure in the Libyan economy and to identify the socio-economic determinants influencing consumer behavior amidst global openness. The research employs a descriptive-analytical approach, utilizing primary data collected through a field survey of (186) Libyan households in Misrata, via a specifically designed questionnaire. Given the categorical nature of the data, Ordinal Logistic Regression was utilized to estimate the econometric models. The empirical results indicate that the head of the household's income (the husband) remains the primary and most significant determinant of consumption patterns. Furthermore, the findings highlight a statistically significant positive contribution of the wife's income in bolstering the family's purchasing power. Notably, the study reveals a pivotal role for the globalization variable, which exerts a direct and significant positive effect on expenditure levels, even when controlling for income variables. This suggests that interaction with globalized trends acts as a structural catalyst for consumption. Finally, goodness-of-fit indicators (Pseudo R2) showed a marked improvement in the model's explanatory power upon the inclusion of the globalization variable, confirming its high statistical adequacy in representing the contemporary consumption function in Libya.