IMPACT OF DEMOGRAPHIC INDICATORS ON HOUSEHOLD CONSUMPTION IN ALGERIA USING PCA

This study examines the influence of demographic indicators on household consumption in Algeria from 1985 to 2022, utilizing Principal Component Analysis (PCA) as the primary methodological tool. Using annual data on population structure, life expectancy, urban and rural distribution, and household disposable income, the analysis identifies the demographic variables most strongly associated with consumption dynamics. The results reveal a robust positive relationship between household consumption and factors such as disposable income, total population, life expectancy, and age-specific cohorts (0–14, 15–64, and 65+), while the rural population exhibits a negative association. The PCA highlights four distinct phases in Algeria’s demographic-consumption trajectory, reflecting shifts in rural development, economic recovery, improvements in health and income, and recent increases in household consumption linked to demographic transitions at both ends of the age spectrum. These findings underscore the importance of integrating demographic considerations into economic policy design. By recognizing the interplay between demographic change and consumption behavior, policymakers can better anticipate demand patterns, strengthen social infrastructure, and promote sustainable growth. The study also points to methodological and contextual limitations, suggesting future research directions such as nonlinear modeling, cross-country comparisons, and micro-level household analyses to deepen the understanding of demographic influences on consumption.