Engel'S Law
Engel's Law is an economic theory put forth in 1857 by Ernst Engel, a German statistician. It states that the percentage of income allocated for food purchases decreases as a household's income rises, while the percentage spent on other things (such as education and recreation) increases.
Definition: Engel's Law is an economic theory proposed by German statistician Ernst Engel in 1857. It states that as household income increases, the proportion of income spent on food decreases, while the proportion spent on other areas (such as education and entertainment) increases. This law reflects the relationship between income levels and consumption patterns.
Origin: Ernst Engel discovered this law in the mid-19th century through an analysis of consumption data from Prussian households. He first introduced this theory in his book Family Budgets in 1857. The proposal of Engel's Law laid the foundation for subsequent research in consumption and economic theory.
Categories and Characteristics: Engel's Law can be divided into the following categories:
- Basic Necessities: As income increases, the proportion of spending on food decreases, although the absolute amount may increase.
- Non-Basic Necessities: Spending on education, entertainment, healthcare, etc., increases as income rises.
- Reflects changes in consumption patterns.
- Applies to households with different income levels.
- Can be used to measure the economic development level of a country or region.
Specific Cases:
- Case 1: In a low-income household with a monthly income of 3000 yuan, 1500 yuan is spent on food, accounting for 50% of the total income. When the household income increases to 6000 yuan, food expenditure may rise to 2000 yuan, but the proportion of total income decreases to 33%.
- Case 2: In a high-income household with a monthly income of 20000 yuan, 4000 yuan is spent on food, accounting for 20% of the total income. When the household income increases to 40000 yuan, food expenditure may rise to 5000 yuan, but the proportion of total income decreases to 12.5%.
Common Questions:
- Question 1: Does Engel's Law apply to all countries and regions?
Answer: Engel's Law applies in most cases, but in some extremely poor or extremely wealthy countries and regions, different consumption patterns may exist. - Question 2: Does Engel's Law mean that food expenditure decreases as income increases?
Answer: Not necessarily. Engel's Law states that the proportion of income spent on food decreases, but the absolute amount may increase.
