Engel's law

According to Engel's law, the share of income spent on food decreases, even as total food expenditure rises

Engel's law is an economic relationship proposed by the statistician Ernst Engel in 1857. It suggests that as family income increases, the percentage spent on food decreases, even though the total amount of food expenditure increases. Expenditure on housing and clothing remains proportionally the same, and that spent on education, health and recreation rises.[1]

Even though Engel's law was proposed roughly 160 years ago, it holds relevance today in the context of poverty, especially the reduction of poverty. For instance, the lines and rates for national poverty are often determined by the food share of household expenditure.[2]

A quotation of Engel himself reveals the same relationship between income and percentage of income spent on food, but also indicates the application of Engel's Law in measuring standard of living:

The poorer is a family, the greater is the proportion of the total outgo [family expenditures] which must be used for food. ...The proportion of the outgo used for food, other things being equal is the best measure of the material standard of living of a population.[2]

  1. ^ "Engel's law". Dictionary. Retrieved March 21, 2021.
  2. ^ a b Anker, R (2011). "Engel's Law Around the World 150 Years Later (PDF)" (PDF). Political Economy Research Institute. 247. Retrieved March 21, 2021.