Revalidation of the Keynes Absolute Income Hypothesis among Households in Choba Community

This study attempted to revalidate the Keynes Absolute Income Hypothesis among households in Choba Community in Obio/Akpor Local Government Area in Rivers State. This was done through examining the consumption expenditure pattern on food, communication, transportation, and clothing of households in the community. The study adopted the cross-sectional survey design with an estimated population of 48,081 inhabitants of Choba community. The sample size consisted of 100 samples drawn from the total population using the Taro Yamane technique. The data collected were analyzed via descriptive and econometric methods. The findings revealed that the marginal propensity to consume (MPC) is less than one (1), positive, and significant (MPC= 0.99), while the average propensity to consume is greater than the marginal propensity to consume (APC = 1.2). This result revalidates the Keynes Absolute Income Hypothesis. Thus, household current income determines household consumption expenditure in Choba Community. The exceptionally high MPC suggest a unique socio-economic condition, likely characterized by income constraints, an immediate need for consumption over savings and persistent increase in price of goods and services as in present day Nigeria. The study therefore, recommend among others that the Government should strengthen fiscal and monetary policies to curb inflation and stabilize the naira.