Family decision-making for educational expenditure: new evidence from survey data for Nigeria

ABSTRACT

This study examines the determinants of educational expenditures by households in Nigeria. Data from the Nigerian General Household Survey, Panel 2012/2013, Wave 2 was used and a double-hurdle model was employed for the analysis. The results suggest household income, the age, education, gender of the household heads and urban versus rural residence have a significant impact on the decision to spend on education. Such expenditures are income elastic overall, but are very different in magnitude for low income compared to higher income families. It is found that the income elasticity of education expenditures are approximately four times greater for households in the bottom two-thirds of the income distribution than for those on the top one-third of the income distribution.

KEYWORDS:

• Household demand
• educational expenditure
• double hurdle model
• Nigeria

JEL CLASSIFICATION:

• R29
• I10
• B23

Acknowledgments

The comments and suggestions by Professor Arnold C. Harberger during the preparation of this paper are greatly appreciated.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ PCD provides education data and visuals globally and also policy orientated analysis in developing countries.

² Available on http://microdata.worldbank.org.

³ 1 USD = 160.8325 Nigerian naira (NGN) in 2012.

⁴ The result is not presented in the interest of brevity, but available upon request.

⁵ Expenditure is used instead of household income because false reporting of income and expenditure fluctuates less than income. This is because income is synonymous with random shock and also due to informal sector prevalence in developing nations and it captures wealth.