THE EFFECT OF SOCIAL SECURITY PROGRAMS AND PER CAPITA INCOME ON HOUSEHOLD CONSUMPTION: AN EMPIRICAL ANALYSIS IN INDONESIA
DOI:
https://doi.org/10.65886/ijde.v1i4.44Keywords:
Household consumption, Per Capita Income, Social Security, Multiple Linear Regression, Robust Standart ErrorAbstract
This study aims to analyze the effect of per capita income and social security programs on household consumption in Indonesia. The background of this study is based on the importance of consumption as a key component in economic growth, as well as the role of social security in strengthening people's purchasing power. The study uses a quantitative approach with time-series data for the period 1993–2023 and multiple linear regression methods. To overcome violations of classical assumptions such as heteroscedasticity and autocorrelation, robust standard error estimation and Newey-West are used. The results of the F test show that simultaneously, per capita income and social security have a significant effect on household consumption. However, the partial t-test showed that only per capita income had a positive and significant effect, while social security programs were insignificant. An R-squared value of 0.9298 indicates that the model has a very high descriptive power. These findings support Keynes' theory of consumption, which emphasizes the role of income in determining consumption. Conversely, these results also indicate the need for further evaluation of the effectiveness of social security programs in improving household welfare. Therefore, policies to increase real income through job creation and productivity are more relevant to encourage sustainable household consumption.
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