Engel's Law

Output: Press calculate

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Formula: E = foodExpenditure / income

Engel's Law is an economic theory introduced by the German statistician Ernst Engel in 1857. It states that as income rises, the proportion of income spent on food falls, even if actual expenditure on food rises. In mathematical terms, the law can be represented by the Engel coefficient E, which is the ratio of food expenditure (foodExpenditure) to total income (income).

This law is used to analyze consumer behavior and can be a measure of the standard of living within a country. A lower Engel coefficient suggests that a household allocates a smaller portion of their budget to food because they can afford a more diverse array of goods and services.

In practical contexts, Engel's Law can help economists and policy makers understand spending patterns and can guide decisions on taxation, social welfare, and economic development programs.

Tags: Economics, Spending Behaviour, Living Standard