قانون إنجل هو مبدأ اقتصادي ينص على أن نسبة الدخل التي ينفقها الأفراد أو الأسر على الغذاء تنخفض مع زيادة دخلهم. بعبارة أخرى، كلما زاد دخل الفرد، تنخفض النسبة المئوية من هذا الدخل التي تُخصص لشراء الطعام. يتم استخدام قانون إنجل في تحليل نوعية الحياة ومؤشرات الفقر في المجتمعات.

Definition and Example of Engel’s Law

Engel’s law states that as household income increases, the percentage of income spent on food decreases. Consequently, low-income families spend a larger proportion of their income on food compared to wealthier households.

While the quality of food and the amount of money spent on food increase with rising income, the overall percentage of the budget allocated for food becomes less. At the same time, when you have a higher income, you can spend more money on other goods apart from food. As income rises, spending on secondary purchases (such as video games, travel, and clothing) also increases.

Sean Snaith, director of the Institute for Economic Forecasting at the University of Central Florida, said in a phone call with The Balance: “You don’t need shoes to survive, but you need food.” “At the lowest income levels, income must be spent on things that keep you alive. If you have very little income, most of it will be spent on food,” he said. “As income increases, you can afford other things you need.”

For example, if your monthly income is $1,500, you might spend a third of it ($500) on food. But if your monthly income is $6,000, you wouldn’t spend a third of it ($2,000) on food. You might spend $1,000, or about one-sixth of your income. The other $1,000 is money you can spend on other necessities or on discretionary goods and services.

How Does Engel’s Law Work?

Engel developed his economic theory by examining various household budgets of European families – focusing on Belgian households – during the mid-19th century. He noted a direct relationship between income and food consumption.

According to the translated German text, he reported that “the poorer the family, the greater the percentage of their total expenditure that must be used for food… The percentage of expenditure used for food, other things being equal, is the best measure of the material living standards of the population.”

Today, data on food and household spending shows that Engel’s observation remains accurate more than 150 years later. In the 2020 Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics, households earning $200,000 or more spent 9.7% of their income on food. But for households with incomes of $15,000 or less, food accounted for 15% of their budget.

Engel’s Law Today

For over a century, Engel’s law has been used in various types of economic analysis concerning how food consumption relates to wealth and well-being. It has been reassessed and refined over the years. It is still used today by many economists.

Among recent findings, economists have discovered that food consumption both at home and away from home corresponds with Engel’s law. For instance, the average American household spends nearly half of its total expenditures on food consumed away from home. This type of purchase is more expensive, which means it will make up a larger part of the budget for low-income households.

Other studies have found that Engel’s law may indicate that low-income families are more likely to spend money on cheaper, starchier foods such as rice, potatoes, and bread. As a result, when income increases, the demand for high-quality food also rises. By applying Engel’s law, researchers have also found that low-income households and countries feel the impact of food price changes more than wealthy households or nations.

Note

Modern derivatives of Engel’s law include Engel curves and the Engel coefficient.

Engel curves help describe how a family spends on certain goods and services relative to income. They are used in economic analysis to measure structural changes, growth, international trade, and inflation.

Engel’s law is used

Engel’s Law is used to determine the standard of living in a country and to define national poverty lines. It is used by the United Nations (UN) to measure and reduce poverty worldwide.

Source: https://www.thebalancemoney.com/what-is-engels-law-5212579