The Determinants of Household Expenditures on Education and Health in Nigeria

Household expenditures on education and healthcare have become an increasing share of total education and healthcare financing in Nigeria. Households commit more of their expenditures despite the government knowing the importance of a healthy, educated workforce and the financial burden on households and the economy. This study examined the determinants of household expenditures on education and healthcare in Nigeria. The Nigerian Household Survey of 2012/2013 was used, and a double-hurdle model was employed for the analysis of each expenditure. The results suggest household income, age, education, gender of household heads and urban versus rural residence have a significant impact on the decision to spend on education. Such expenditures are income elastic overall but are very different in magnitude for low compared to higher income families. It was found that the income elasticity of education expenditures are approximately four times greater for households in the bottom two-thirds of the income distribution than for those in the top one-third. Similarly, for healthcare, it was found that the key variables are the level of their total expenditures, gender of the household, size of the household and whether household member include those aged over 60. Moreover, we found that the marginal propensity to spend on healthcare is larger for female-headed households and for households with either a head or other member of the household who is over 60.