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THE STATISTICAL ANALYSIS OF THE EXPENDITURES AND INCOME OF NIGERIANS IN RELATION TO POVERTY

CHAPTER ONE

1.0  INTRODUCTION

Income and expenditures are the foundation of any viable business or economy, as the economy of the nation is a direct replica of the economies of its citizens. The concept of expenditure and income in Nigeria has to be clearly understood. We all know that in a developing country like ours, there is need for a concrete study of how Nigerians expend vis a vis their level of income in relation to their poverty level seeing that a vast majority of Nigerians live below the poverty line of less than one dollar per day (Okonkwo 2007). Aside knowing this, there is also need to understand the pattern of spending of the general Nigeria populace especially as regards their saving habit. The definition of income and expenditures encompasses different areas and types of transactions, as different professional disciplines see them in ways relevant to their specific situations. Understanding the different types, especially expenditures, enables companies, economies or families to record financial data more accurately with a view to reducing the poverty level in Nigeria.

Income has different definitions depending upon the specified area of business. General income is cash or an equivalent that results from wages or salaries, rent from land or a building or interest, dividends or profit from an investment (Mohammed 2005). Economists and statisticians view revenue as the maximum amount of money a person spends during any given period without becoming worse off. In economic terms, income is the real driver of the economy, whether at the family or national level, since buyers' demand for goods and services can only exist if buyers have income to spend.

Expenditure is cash or a cash equivalent paid in exchange for goods and services. An expense may also be a charge against available revenue, as in the case of an invoice awaiting payment. Revenue expenditure pays for goods and services that the family uses within a short time frame, such as one year or less. If a family or nation makes expenditure for fixed assets like machinery or large equipment that lasts for longer than one year, this qualifies as a capital expenditure. Businesses, families, nations etc attempt to keep costs as low as possible without sacrificing revenue. This comes with accurate recording and controlling of income and expenditures.

1.1 STATEMENT OF GENERAL PROBLEM

Generally in Nigeria, expending without recourse to income has been a major problem. This problem has done more harm than good to our economy at large seeing that when expenditures are made without consideration to the income or amount earned it helps to increase the poverty level in Nigeria. Nigeria, being a developing country has had its fair share of criticism of being a country with a very high level of poverty with almost half of its citizens living on less than a US dollar per day. It is being said that Nigerians spend extravagantly, if this claim is anything to go by then the reason of our dwindling economy isn’t farfetched.

1.2. AIMS AND OBJECTIVES OF THE STUDY

This study is aimed at looking at possible areas Nigerians can be educated to increase their level of savings. The following are the cardinal aims and objectives of this research work:

1.  To educate Nigerians on the relationship of their expenditures to income with a view to enhancing their saving habit.

2.  Recommending solutions of improving Nigeria’s economy at large.

3.  Identifying major causes of excessive expenditures of Nigerians.

4.  Determining the effect of income earned to expenditure.

1.3. SIGNIFICANCE OF THE STUDY

The importance of this study is mainly to identify major causes of excessive expenditures of Nigerians. Another cardinal significance of this study is to know if there is any statistical significant relationship between expenditures and income in relation to poverty level. Another major significance of this study is to determine if there is a relationship between the economy of Nigeria to how Nigerians spend in relation to their income. From the various studies as well as discussion mentioned earlier, it is apparent that there is enough reason to warrant a study that will examine these factors. So that we can recommend solutions on how the economy can be improved upon, on how Nigerians can save more and finally know the reasons for excessive spending in Nigeria.

1.4 SCOPE AND LIMITATIONS OF THE STUDY

Just like the topic of the study states, the scope is to know the relationship between expenditures and income of Nigerians in relation to their poverty levels. Another scope of this study is to determine the income Nigerians earn to their expenditure. The research covers in a comprehensive position the ways and what Nigerians majorly spend on in relation to their income.

LIMITATIONS

It is necessary to mention some of the limitation of this research work. The principal limitation is the difficulty in obtaining relevant information. The school library has related books on the subject of the study. There was problem in the data obtained, since the researcher has to go round in retrieving these questionnaires from respondents. Subsequent to this problem is the combination of academic work with the study. There were also little cases of missing data in these questionnaires. Notwithstanding, in the highlighted limitation above, it is hoped that this research will be useful to Nigerians who would want to enhance their saving habit and also to those who would want to know the relationship between expenditures and income to poverty level. 

1.5 DEFINITION OF TERMS

Expenditure: the act of spending or using money.

Expense: the money spent on something.

Income: the money that a person, a region, a country etc. earns from work from investing money, time, business etc.

1.6. RESEARCH HYPOTHESES

The research hypotheses are as follows:

HYPOTHESIS 1

H0: there is no significant relationship between income and expenditure.

H1: there is significant relationship between income and expenditure.

Level of significance: 0.05

Decision rule: reject H0 if p-value is less than the level of significance. Accept H0 if otherwise.

HYPOTHESIS 2

H0 : There is no significant relationship between income and expenditure on poverty level.

H1 : There is significant relationship between income and expenditure on poverty level.

Level of significance (α): 0.05

Decision rule: reject H0 if the p-value is less than the level of significance (α) accept H0 if otherwise.