An Empirical Testing of Life Cycle Hypothesis Among the Employees of the Hospitality Sector

Abstract

A country s economic development depends on the sustained contribution of consumption which newlinewill in turn support strong employment and wage growth and the consumer confidence. newlineConsumption is both quantitative and qualitative phenomenon. Consumption is qualitative newlinebecause consumption is influenced by the trends and society. Research witnesses how consumer newlinelogically transforms their consumption when state-provides services, such as healthcare, newlineeducation and culture. Considering the important role played by the consumption and the newlineconsumers in the development of the economy and society, it was decided to study how newlineconsumers smooth out their consumption pattern throughout their lifetime. Life cycle hypothesis newlineis ideal choice to study the consumption pattern in the different stages of life. This pattern of newlineconsumption and income results in young and aging individuals having greater propensity to newlineconsume and lower propensity to save. It is evident that the life cycle model is consistent with newlinethe observed behaviour of a majority of households. But the models appears to be inadequate in newlineminority of households where the income, wealth and other sources of income is high at younger newlineage. This thesis attempts to test the theory in such minority of household who are working in the newlinehospitality sector, where it is found that income have consistent increasing trend. The dependent newlinevariable used for the study is consumption, saving and investment which is calculated on the newlineindividual basis. The independent variables of the study were age, experience, educational newlinequalifications, income and position and status. A sample of 2500 respondents of various age newlinegroups, income levels has been collected using judgement sampling technique from the newlinehospitality industry. It is being ensured that respondents are included from all categories of newlinehotels from all parts of Bangalore, so that the sample is representative of the whole Bangalore newlinecity including urban and metro. The data was collected during 2018-2019. The study found that newlineindependent variables like age, income have a positive impact (p lt .05) on the consumption. This newlineimplies that as independent increases, the dependent variable also have increasing trend. It is newlinefound that the marginal propensity to consume is low in young (20-30 years) and aged newlineemployees (51 and above) of the hospitality industry and marginal propensity to consume is high newlinein the middle-aged employees (31-40 and 41-50). The insight of the study enlightens that newlinecomplete validity of the life cycle hypothesis was not established in the hospitality industry.