Project Materials

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

Chapter one

Introduction

Income and expenditures are the foundation of any healthy business or economy, because the national economy is a direct reflection of its citizens’ economies. The concept of expenditure and income in Nigeria must be properly understood. We are all aware that in a growing country like ours, there is a need for a specific study of how Nigerians spend their income in relation to their poverty level, given that the vast majority of Nigerians live below the poverty line of less than one dollar per day (Okonkwo 2007). Aside from this, it is important to understand the general Nigerian population’s spending patterns, particularly their saving habits. The definition of income and expenditures spans several sectors and types of transactions, as different professional disciplines interpret them in ways that are relevant to their unique conditions. Understanding the various categories, particularly expenditures, allows businesses, economies, and households to record financial data more precisely, which helps to reduce poverty in Nigeria.

Income is defined differently based on the specific field of company. General income is defined as cash or an equivalent derived from wages or salaries, land or building rent or interest, dividends, or investment profit (Mohammed 2005).

Economists and statisticians define revenue as the most money a person can spend in a particular period without becoming worse off.

In economic terms, income is the true driver of the economy, whether at the personal or national level, because buyer demand for goods and services can only exist if they have money to spend.

Expenditure is defined as cash or currency equivalents paid in exchange for goods and services. An expense can also be a charge against available revenue, such as an invoice that is awaiting payment.

Revenue spending pays for products and services that the family consumes in a short period of time, typically one year or less.

A capital expenditure occurs when a family or nation spends money on fixed assets such as machinery or massive equipment that will endure more than a year.

Businesses, individuals, and governments all want to keep costs as low as possible while maintaining revenue. This entails accurately recording and regulating revenue and expenses.

1.1 Statement of General Problem

In general, Nigerians have struggled with spending without a source of income. This problem has caused more harm than good to our economy as a whole because when expenditures are made without regard for income or amount generated, it contributes to Nigeria’s poverty rate.

Nigeria, as a developing country, has received criticism for having a high level of poverty, with about half of its population surviving on less than one US dollar per day. It is claimed that Nigerians spend extravagantly; if this is true, the cause for our decreasing economy is not far-fetched.

1.2. GOALS AND OBJECTIVES OF THE STUDY

This study will look at potential areas where Nigerians might be educated to enhance their level of savings. The following are the primary aims and objectives of this research project:

1. To educate Nigerians on the relationship between their expenditures and income in order to improve their savings habits.

2. Recommending ways to improve Nigeria’s overall economy.

3. Identifying the key causes of Nigerians’ excessive expenditures.

4. Calculating the effect of income received on expenditure.

1.3. The significance of the study

The primary goal of this study is to determine the major causes of Nigerians’ excessive expenditures. Another important aspect of this study is to determine whether there is a statistically significant relationship between expenditures and income in regard to poverty levels.

Another important relevance of this study is to evaluate whether there is a link between Nigeria’s economy and how Nigerians spend in relation to their income.

Based on the previous research and discussions, it is clear that there is sufficient justification to conduct a study on these aspects.

So that we may offer strategies for improving the economy, helping Nigerians save more, and finally understanding the causes of excessive spending in Nigeria.

1.4 Scope and Limitations of the Study

The goal of the study, as stated in the topic, is to determine the relationship between Nigerians’ expenditures and income in relation to their poverty levels.

Another goal of this research is to compare Nigerians’ income to their expenditures. The study comprehensively examines how and what Nigerians spend the majority of their income on.

LIMITATIONS

It is vital to discuss some of the limitations of this research. The main limitation is the difficulty of acquiring appropriate information. The school library contains pertinent books on the subject of study.

There was a difficulty with the data acquired because the researcher had to go about collecting these questionnaires from respondents. Following this issue is the combination of academic work and study.

There were a few occurrences of missing data in these questionnaires. Despite the limitations mentioned above, it is hoped that this research would be valuable to Nigerians who wish to improve their saving habits, as well as those who want to understand the relationship between expenditures, income, and poverty levels.

1.5 Definition of Terms

Expenditure is the act of spending or using money.

Expense is the money spent on anything.

Income is the money earned by a person, a region, a country, or other entity through effort, investment, time, or company.

1.6. RESEARCH HYPOTHESIS

The research hypotheses are listed below:

Hypothesis 1.

H0: There is no substantial correlation between income and expenditure.

H1: There is a strong link between income and expenditure.

Level of significance: 0.05.

If the p-value is less than the level of significance, reject the null hypothesis. Accept H0 if otherwise.

Hypothesis 2.

H0: There is no meaningful link between income and expenditure on the poverty line.

H1: There is a considerable link between income and expenditure on the poverty line.

The level of significance (α) is 0.05.

The decision rule is to reject H0 if the p-value is below the level of significance (α), and accept H0 otherwise.