Household Consumption Behaviour in Pakistan under the Shadow of Personal Insecurity

Abstract

Terrorism in Pakistan has become a main and highly critical phenomenon in last decade. It is affecting the economy significantly. This study aims to determine the effect of personal sense of insecurity on household consumption pattern both at provincial level (Punjab, Sindh, KPK and Balochistan) and for overall Pakistan. To serve this purpose his study estimates the Engle expenditure function, by incorporating personal sense of insecurity as an explanatory variable. Pakistan Panel Household Survey (PPHS) 2010, conducted by Pakistan Institute of Development Economics and World Bank are used for the analysis. The empirical results suggest that personal sense of insecurity alters the households’ consumption expenditure significantly. Households adjust their consumption expenditure when they sense insecurity by increasing the expenditure on food items and cut their expenditure on non-food durable and non-food non-durable commodities.