Factors Influencing the Consumer Expenditure during Covid-19 by Using Garret Ranking Analysis

Introduction

COVID-19 has disrupted humankind in a manner not seen in recent times. In order to contain the spread of the virus, the lockdown was implemented across the countries which have disrupted the world economy by sending unprecedented shocks to producers and consumers. This has brought changes in both the demand and supply side which led to a major shift in consumer spending behavior as people faced layoffs and salary reductions due to the decisions made by external sources. As a result, huge changes were observed in the spending patterns of consumers. Consumer priorities have become centred on the most basic needs, sending demand for hygiene, cleaning and staples products soaring, while non-essential categories slump. This is due to the rise in prices of groceries and other essentials which led to an increase in the expenditure of a household, this caused the consumer to spend their income on only necessities and essential food items, which led to an increase in expenditure on food and decline in expenditure on other products.

There are several factors that resulted in an increase in the expenditure of consumers directly or indirectly. The factors that influenced consumer expenditure were unemployment levels, cost of living and consumer confidence [1]. Thus, the present study tried to analyze the effect of the pandemic on consumer spending behavior.

A study conducted on income losses analyzed that a certain set of households lost income from certain sources due to the pandemic. Income losses have been borne similarly across the rural and urban populations, both within and across countries.[2]

The results regarding the study on the rise in prices of essential food items to understand the difficulty faced by common people during the pandemic suggested that, compared to pre-pandemic, the prices of essentials increased by 40 to 100 percent after the pandemic, thus, making it difficult for households to meet their daily needs.[3]

In a study related to the household spending patterns of the households (U.S. and Israel) during Covid-19 [4], it is observed that most of the respondents in both countries reported no change in expenditure but the spending on food is more volatile i.e., 36% in the U.S. and 46% in Israel reported an increase in expenditure on food and credit card debts.

 Several researchers investigated the effects of the Covid-19 pandemic on the household economy in order to know the extent of change in income and expenditure. In a similar study conducted by [5], during the lockdown it is evident that there was a significant decrease in family income and an increase in family expenditures during the pandemic in which the income was spent more on nutrition, cleaning, communication, water-gas expenses and income is less spent on cultural activities and transportation.

Methodology

The present study was conducted in Jogulamba Gadwal and Wanaparthy districts of Telangana state. Primary data was collected from a sample of 200 respondents particularly infected with Covid-19. The study incorporated a questionnaire as a tool to conduct the survey. Keeping in mind the literacy gap of respondents, the questionnaire was used in the form of an interview schedule. For the present study, 8 factors were considered to analyze the impact of Covid-19 on consumers’ expenditure. The ranking technique has been used to analyze the factor preference of the respondents. Each statement was rated by respondents on a 5-point Likert scale ranging from “strongly agree” to “strongly disagree”. Garett ranking technique was applied to study the preference. The prime advantage of this technique over simple frequency distribution is that factors were arranged based on the preference of respondents.

Application of Garett’s ranking technique

Garrett method is often used to complete the ranking of an alternative based on the ratings of respondents that are converted into certain ranks. This ranking is done to find the most significant factor which had influenced the respondent during the pandemic. These responses were ranked using the Garett ranking technique based on their impact level such as “Strongly Agree” as rank-1, “Agree” as rank-2, “Neutral” as rank-3, “Disagree” as rank-4, “Strongly Disagree” as rank-5.  Garrett’s formula for converting ranks into a percent is as below:

 percent position = 

Where,

Rij = Rank given for the ith variable by jth respondents

 Nj = Number of variables ranked by jth respondents

Each rank’s percent position was converted into points using the table provided by Garrett and Woodworth [6]. The value of R ij is then multiplied by the Garrett Value to determine the total Garrett Score. The average Garrett Score is then calculated by dividing the Total Garrett Score by the number of alternatives. The alternative ranking is done based on the highest average value.

Percentage positions and their corresponding Garett table values

Table-1:  percent positions and Garett values of the factors

Results

Respondents were asked to give their ranking between 1-8 regarding the factors influencing the consumption pattern during Covid-19.

Ranking of factors influencing the consumption pattern

Table -2:  Ranking of the factors influencing the consumer expenditure pattern in Jogulamba Gadwal district

From Table No.2 it is evident that, the factor that has the highest influence on consumers was high expenditure after the pandemic with an average of 7740 and a mean score of 77.40 followed by consumption of healthy products increased after the pandemic with a mean score of 68.23 and total score of 6823. Accordingly, reduced family income was ranked third with an average score of 67.65. Reduced family income after the outbreak of Covid 19, which has stood in fourth place with an average score of 57.64.  However, factors like “expenditure was more before the pandemic” was ranked least with an average score of 50.79. The rise in expenditure was due to an increase in the price of commodities due to various factors like transportation and lack of labor, respondents faced a reduction of income due to the lockdown. People have concentrated on boosting their immunity to prevent the spread of the virus. Thus, all these factors have directly or indirectly influenced consumer expenditure.

Table -3:  Ranking of the factors influencing the consumer expenditure pattern in Wanaprthy district

From Table No.3 it is observed that, the highest influential factor on consumers was high expenditure after the pandemic with an average of 7587 and a mean score of 75.87 followed by consumption of healthy products increased after the pandemic with a mean score of 65.61 and total score of 6561. Accordingly, reduced family income was ranked third with an average score of 64.56. Junk food consumption has decreased after the outbreak of Covid 19, which has stood in fourth place with an average score of 56.28. A similar trend of consumption patterns was observed in both districts despite varied cultures and concerns. This shows that Covid-19 has a similar kind of impact on each and every household regardless of location.

 Conclusion:

The present study aimed to identify the preference and rankings of factors affecting consumer expenditure and behavior during Covid-19. It is evident that the crisis created by the pandemic has had a major influence on the financial stability of families as many companies laid off their employees. It has created an economic and psychological impact on consumers as they struggled to survive the pandemic with major setbacks. This impact caused people to shift their consumer behavior thereby, focusing only on the essentials throughout the pandemic. The results of the study found that the factors that had the most impact during the pandemic were having more expenditure and increased consumption of healthy products increased after the outbreak to boost their immunity. This study also highlighted that a reduction in family income has more influence on consumer expenditure as they faced difficulty to manage their expenses. Policies should be made in such a manner that they can help people to overcome financial crisis when such disasters occur in future.

Future scope of study:

• Consumption behavior and spending patterns post-pandemic can be studied in similar location
• Change in expenditure patterns on non-essential goods during the pandemic can be studied for the same sample

Acknowledgement: The authors would like to thank College of Community Science, Professor Jayashankar Telangana State Agricultural University for providing an opportunity to carry out this research. Further the thanks are due to the participants of the study without their cooperation the study wouldn’t have been possible.

Conflict of interest: The authors declare that they have no conflict of interest in the publication.

Contributions: Preparation of questionnaire, data collection and writing the manuscript was carried out by first author. Interpretation of the results were carried out by both the authors. Second author had been involved in revising and approval of final manuscript.

References

[1.]       Jones, K. 2020. These charts show how COVID-19 has changed consumer spending around the world. World Economic Forum.  https://www.nature.com/articles/s41562-021-01096-7.pdf

[2.]       Josephson, A., Kilic, T. and Michler, J.D. 2021. Socioeconomic impacts of COVID-19 in low-income countries. Nature Human Behaviour. 5, 557–565 (2021). https://doi.org/10.1038/s41562-021-01096-7

[3.]       Singh R. K., Upadhyay, P., Mishra, A and Mehra, S. 2021. Amid pandemic, spike in prices of essential items makes life difficult for common people. India Today. https://www.indiatoday.in/india/story/pandemic-spike-prices-essential-items-difficult-common-people-1812561-2021-06-08         

[4.]       Çelik, B., Ozden, K and Dane, S. 2020. The effects of COVID-19 pandemic outbreak

on the household economy. Journal of Research in Medical and Dental Science. 8: 51-56.

[5.]       Roll, S., Chun, Y., Kondratjeva, O.  Despard, M., Tayri, T. M. S  and Weiss, M. G. 2021. Household Spending Patterns and Hardships during COVID-19: A Comparative Study of the U.S. and Israel. Journal of Family and Economic Issue. 43, 261–281 (2022). https://doi.org/10.1007/s10834-021-09814-z

[6.]       Garrett, E. H and Woodworth, R. S. 1969. Statistics in psychology and education. Vakils, Feffer and Simons Pvt. Ltd. Bombay. 329.