Retrospectives: Engel Curves
AbstractEngel curves describe how household expenditure on particular goods or services depends on household income. German statistician Ernst Engel (1821-1896) was the first to investigate this relationship systematically in an article published about 150 years ago. The best-known single result from the article is "Engel's law," which states that the poorer a family is, the larger the budget share it spends on nourishment. We revisit Engel's article, including its context and the mechanics of the argument. Because the article was completed a few decades before linear regression techniques were established and income effects were incorporated into standard consumer theory, Engel was forced to develop his own approach to analyzing household expenditure patterns. We find his work contains some interesting features in juxtaposition to both the modern and classical literature. For example, Engel's way of estimating the expenditure-income relationship resembles a data-fitting technique called the "regressogram" that is nonparametric -- in that no functional form is specified before the estimation. Moreover, Engel introduced a way of categorizing household expenditures in which expenditures on commodities that served the same purpose by satisfying the same underlying "want" were grouped together. This procedure enabled Engel to discuss the welfare implications of his results in terms of the Smithian notion that individual welfare is related to the satisfaction of wants. At the same time, he avoided making a priori assumptions about which specific goods were necessities, assumptions which were made by many classical economists like Adam Smith. Finally, we offer a few thoughts about some modern literature that builds on Engel's research.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 24 (2010)
Issue (Month): 1 (Winter)
Find related papers by JEL classification:
- B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Stockholm School)
- B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
- D10 - Microeconomics - - Household Behavior - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John DiNardo & Justin L. Tobias, 2001.
"Nonparametric Density and Regression Estimation,"
Journal of Economic Perspectives,
American Economic Association, vol. 15(4), pages 11-28, Fall.
- Joachim Engel & Alois Kneip, 1996. "Recent approaches to estimating Engel curves," Journal of Economics, Springer, vol. 63(2), pages 187-212, June.
- Roger Fouquet, 2013. "Long Run Demand for Energy Services: the Role of Economic and Technological Development," Working Papers 2013-03, BC3.
- Anaïs Carlin & Sébastien Verel & Philippe Collard, 2013. "Modeling Luxury Consumption: An Inter-Income Classes Study of Demand Dynamics and Social Behaviors," GREDEG Working Papers 2013-13, Groupe de REcherche en Droit, Économie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
- Leonhard K. Lades, 2012. "The impact of differential satiation dynamics on changing consumer behavior, wellbeing, and innovative activity," Papers on Economics and Evolution 2012-16, Max Planck Institute of Economics, Evolutionary Economics Group.
- Abdur Rehman & Wang Jian & Zhang Runqing, 2014. "Estimation of Urban-Rural Expenditure and Household Size Elasticities of Food Items in Pakistan: - Evidence From PSLM Survey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(2), pages 183-190, February.
- Andreas Chai & Alessio Moneta, 2012.
"Back to Engel? Some evidence for the hierarchy of needs,"
Journal of Evolutionary Economics,
Springer, vol. 22(4), pages 649-676, September.
- Andreas Chai & Alessio Moneta, 2011. "Back to Engel? Some evidence for the hierarchy of needs," Papers on Economics and Evolution 2011-13, Max Planck Institute of Economics, Evolutionary Economics Group.
- Barigozzi, Matteo & Alessi, Lucia & Capasso, Marco & Fagiolo, Giorgio, 2009.
"The distribution of households consumption-expenditure budget shares,"
Working Paper Series
1061, European Central Bank.
- Barigozzi, Matteo & Alessi, Lucia & Capasso, Marco & Fagiolo, Giorgio, 2012. "The distribution of household consumption-expenditure budget shares," Structural Change and Economic Dynamics, Elsevier, vol. 23(1), pages 69-91.
- Nicholas Oulton, 2011. "The Wealth and Poverty of Nations: True PPPs for 141 Countries," CEP Discussion Papers dp1080, Centre for Economic Performance, LSE.
- Wolfhard Kaus, 2012. "Beyond Engel s Law - Pursuing an Engelian Approach to Welfare A Cross Country Analysis," Jena Economic Research Papers 2012-028, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Leonhard Lades, 2013. "Explaining shapes of Engel curves: the impact of differential satiation dynamics on consumer behavior," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1023-1045, November.
- Armagan Tuna Aktuna Gunes & Christophe Starzec & François Gardes, 2013.
"A new estimation of the size of informal economy using monetary and full expenditures in a complete demand system,"
UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers)
- Armagan Tuna Aktuna Gunes & Christophe Starzec & François Gardes, 2013. "A new estimation of the size of informal economy using monetary and full expenditures in a complete demand system," Documents de travail du Centre d'Economie de la Sorbonne 13053, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Bjarne Jensen & Paul Boer & Jan Daal & Peter Jensen, 2011. "Global restrictions on the parameters of the CDES indirect utility function," Journal of Economics, Springer, vol. 102(3), pages 217-235, April.
- Ulrich Witt, 2011. "Sustainability and the Problem of Consumption," Papers on Economics and Evolution 2011-16, Max Planck Institute of Economics, Evolutionary Economics Group.
- Matteo Barigozzi & Alessio Moneta, 2012. "Identifying the Independent Sources of Consumption Variation," LEM Papers Series 2012/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.