INVESTIGATING THE DETERMINANTS OF ENERGY EXPENDITURE IN MALAYSIA MAJOR CITIES BY MIDDLE-INCOME HOUSEHOLDS

Abstract

This paper attempts to investigate the factors that affecting energy expenditure in Malaysia capital city by middle-income households. The aim of this study was to find out the determinants of household spending on electricity and petrol in three major cities (George Town, Kuala Lumpur and Johor Bahru). A survey was conducted in these three major cities and a total of 473 observations are used for estimations by using the censored Tobit model. The results showed that household income is statistically significant and do affect electricity spending. Meanwhile, petrol spending is not significant as households consider petrol as an undesirable purchase in Malaysian domestic market. Also, there is a strong evidence of relationship between the number of electrical appliances and the number of rooms with electricity expenditure, as well as the number of private cars with petrol spending due to the complementarity. The results also proved that race does not play a crucial role in affecting electricity and petrol expenditure in Malaysia. But from a different perspective, electricity spending pattern by households in Johor Bahru, George Town and Kuala Lumpur is completely different, whereas Johor Bahru has different spending patterns in petrol.