Engel's Law is an observation in economics that states that as income rises, the proportion of income spent on food falls, even if the absolute spending on food rises. In other words, the income elasticity of the food demand is between 0 and 1.
The law was named after the statistician Ernst Engel (1821-1896).
Engel's law does not imply that food expenditure remains unchanged when incomes increase: This suggests that consumers increase their spending on food products in less percentage of their income increases.
One application of this statistic treats it as a reflection of the standard of living of a country. Because this proportion - or "Engel Coefficient" - increases, the state is essentially poorer; In contrast the low Engel coefficient shows a higher standard of living.
The interaction between Engel's law, technological advances, and the process of structural change is essential to explain long-term economic growth as suggested by Leon, and Pasinetti.
Video Engel's law
See also
- Engel Curve
Maps Engel's law
References
Source of the article : Wikipedia
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