Patterns and Convergence in Household Spending: Insights From Western and Eastern Europe

This paper identifies and analyzes the trends and patterns in consumption differences between Eastern and Western European households from 2000 to 2021. Using clustering methods and regression analysis, it examines consumer spending patterns and convergence processes, focusing on how household expenditures have evolved over time in these regions. The study employs Ward's hierarchical clustering and k-means clustering to categorize countries based on their expenditure structures. The findings reveal two distinct patterns of consumer spending across Europe, with Eastern European countries prioritizing basic necessities, such as food and non-alcoholic beverages, and Western European countries allocating more to higher-order goods and services, including recreation, culture, and housing. The research confirms a convergence of spending on certain categories, such as food and miscellaneous goods and services, indicating an improvement in living standards in Eastern Europe. However, it also identifies areas of divergence, particularly in spending on clothing, footwear, communication, and education. Despite these changes, the study concludes that consumption structures remain relatively stable over time between Eastern and Western Europe. The persistence of these patterns underscores the enduring impact of economic and social factors on consumer behavior. The paper provides valuable insights for policymakers and businesses, highlighting the need for tailored public policies and strategic business decisions to address regional consumption differences. By understanding these patterns, stakeholders can better promote balanced economic development, reduce regional disparities, and improve living standards across Europe. Future research should incorporate primary data and individual demographic factors to further explore the nuances of consumer behavior within the European context, offering a more comprehensive understanding of the ongoing convergence and divergence in household consumption.