An empirical regularity, stated by the statistician Ernst Engel, that as a household's income rises the proportion of income spent on food falls, even though the absolute amount spent on food may rise.
- It is about the share of spending on food, not the absolute amount; richer households spend more on food in money terms but less as a fraction of total expenditure.
- The "Engel coefficient" is the share of total spending devoted to food; a falling coefficient signals rising living standards.
- It is widely used to gauge welfare and the shift of consumption from necessities towards services and discretionary goods as economies grow.
- In India the steady fall in the food share of consumption (seen in successive consumption surveys) is read as evidence of rising incomes; verify the latest survey.
- It connects to poverty measurement and inclusive growth; see concept poverty line and the concept gini coefficient.
The statement (food share of spending falls as income rises), the association with Ernst Engel, and the Engel coefficient are testable consumption-and-welfare facts.
Engel's Law is about the falling share of income spent on food, not a fall in the absolute amount spent; do not confuse Ernst Engel (the statistician) with Friedrich Engels (the political economist).
As income rises, the share of spending on food falls (Ernst Engel); a lower food share signals higher living standards.