Determinants of households' computer expenditure

Wen Yin, Purdue University

Abstract

This study investigated the determinants of household computer expenditures using 2000 Consumer Expenditure Survey. The purposes of this study were to (1) develop a conceptual model for computer expenditure, (2) determine factors that influence consumers' expenditure on computers, and (3) show a link between household life cycle stages and expenditure on computers. This study proposed a conceptual model that includes age, life cycle stage factor, socioeconomic factors, region of residence, and seasonality factors. Because previous life cycle stage expenditure studies overlooked the distinction between a household's decision to spend on a good or service and the amount to spend on the good or service, this study utilized a double hurdle model to estimate whether to spend on a good or service and the amount the household spent. The double hurdle model consists of a Probit model and a truncated regression model. Computer hardware and computer software expenditures were examined separately. Variables in the conceptual model included age, life cycle stage, gender, race, education, household after tax income, computer ownership, region of residence, and quarter of purchase. Results of the Probit models showed that life cycle stage factor, gender, education, household after tax income, computer hardware ownership, and region of residence were significant predictors of the purchase of both hardware and software. Results of the truncated regression models showed that life cycle stage factor was the significant predictor for hardware expenditure. Gender, income, and season were significant in truncated regression model for software. Implications were provided for researchers, marketers, and policy makers. This study reveals double hurdle model is the solution to durable products expenditure study. Finally, seasonality did not affect households' computer expenditure. For example, married without children households may be a niche market. Marketing managers may link socioeconomic factors to consumer behavior in addition to life cycle stages.

Degree

Ph.D.

Advisors

DeVaney, Purdue University.

Subject Area

Economics|Marketing

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