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| 55521 | Engel's Law: Richer people spend more money on food, but it makes up a smaller share of their income | engels-law-food-spending | post | publish | <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>Richer people tend to spend more money on food.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>We see this relationship when we look at data on food expenditure from across the world.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the chart you see food expenditure plotted against total consumer expenditure per person. Total consumer expenditure is any personal expenditure on goods and services.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>On the y-axis, we have the average amount of money spent on food per person, in countries across the world.{ref}This data comes from the United States Department of Agriculture (USDA) Economic Research Service, which estimates this for countries where available market data is sufficient.{/ref} This measures money spent on food consumed at home – from stores and supermarkets. The source <em>does not </em>include food eaten out-of-home, from restaurants and cafes (however, that would be useful data to have). Tobacco and alcoholic beverages are also excluded.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>On the x-axis, we have a measure of prosperity, total expenditure. Expenditure tells us how much disposable income people have to spend on goods and services such as food, housing, education, health, and leisure activities. It’s important to ensure that we can afford all of the essentials that give us a high and comfortable standard of living.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Countries which are poor – and where therefore people’s expenditure is very low – can be found, richer countries are further towards the right. This is shown on a log axis by default, but you can change it to a linear scale on the interactive chart.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Both metrics are measured in US dollars per person per year.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>What we see is a strong positive relationship: where expenditures are high people tend to spend more money on food</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>At expenditures below $5,000, the average person tends to spend less than $1,000 on food. At expenditures above $10,000, it's common for the average to be $2,000 or more per person per year.</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/food-expenditure-vs-gdp" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:heading {"level":3} --> <h3>For richer people, food makes up a smaller share of their expenditure</h3> <!-- /wp:heading --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>The amount of money spent on food might increase in absolute terms — as we saw in the previous chart — it falls as a share of people’s expenditure. This is what the following chart shows.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the chart, we’ve plotted food spending against total expenditure again, but this time food spending is measured as a percentage of someone’s total expenditure.{ref}Again, this data comes from the United States Department of Agriculture (USDA) Economic Research Service, which estimates this for countries where available market data is sufficient.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In countries with expenditures below $10,000, it’s common for people to spend a quarter or more on food.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>As total spending rises, a smaller and smaller share goes toward food. At high expenditures, it’s common for people to spend 10% or less. This is despite the fact that they spend <em>more</em> on food in absolute terms.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Both of these points are positive signs for consumers. Spending more on food in dollar terms often means that people are eating more diverse diets. At low incomes, people tend to <a href="https://owid.cloud/grapher/share-of-energy-from-cereals-roots-and-tubers-vs-gdp-per-capita">rely on cheaper staple crops</a> such as cereals and tubers for most of their calories. As people get richer they can afford other foods such as fruits, vegetables, legumes, meats, and dairy products which have a wider range of micronutrients, protein, and fats.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Spending less of our money on food means we have more disposable income for other essentials such as education, healthcare, and housing.</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/food-expenditure-share-gdp" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:heading {"level":3} --> <h3>Engel’s Law: how food spending changes with income</h3> <!-- /wp:heading --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>That gives us two important insights into food spending.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>First, richer people tend to spend more money on food in absolute terms. Second, food tends to account for a smaller percentage of their total expenditure.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The chart illustrates this relationship: in absolute terms spending on food increases with income (shown in purple), in percentage terms it decreases (shown in green).</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Combine them and we get a relationship called ‘<a href="https://en.wikipedia.org/wiki/Engel%27s_law">Engel’s Law</a>’: as household income (and expenditure) increases, the percentage that is spent on food decreases, but the absolute amount spent on food increases. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Research has shown that this relationship holds true <em>within</em> countries: studies looking at household expenditures in South Africa and China, for example, found the same pattern.{ref}Mulamba, K. C. (2022). <a href="https://www.nature.com/articles/s41599-022-01454-4">Relationship between households’ share of food expenditure and income across South African districts: a multilevel regression analysis</a>. Humanities and Social Sciences Communications, 9(1), 1-11.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Chen, M. (2022). Engel’s law in China: Some new evidence. Review of Development Economics.{/ref}</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":55522,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic.png" alt="" class="wp-image-55522"/></figure> <!-- /wp:image --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:separator --> <hr class="wp-block-separator"/> <!-- /wp:separator --> <!-- wp:heading {"level":5} --> <h5>Keep reading at <em>Our World in Data...</em></h5> <!-- /wp:heading --> <!-- wp:paragraph --> <p>In a <a href="https://ourworldindata.org/diet-affordability"><strong>related article</strong></a>, I look at what happens at the bottom of the global income distribution: it’s estimated that around three billion people can’t afford a healthy, diverse diet even when they spend most (or all) of their income on food. We want them to be able to spend more on food so they can have a diversified diet, and we don’t want them to have to spend all of their money to achieve this.</p> <!-- /wp:paragraph --> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/food-prices","className":"is-style-thin"} /--> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/diet-affordability","className":"is-style-thin"} /--> | {
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2023-01-19 11:43:15 | 2024-02-16 14:22:54 | 1cA7lv3ROTMuTWV48zIkIx21_C3MD-qbH7UGntiCDK6g | [
"Hannah Ritchie"
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How does spending on food change as incomes rise? | 2023-01-19 11:43:15 | 2023-07-10 15:14:46 | https://ourworldindata.org/wp-content/uploads/2023/01/Engels-Law-Featured-Image-01.png | {} |
Richer people tend to spend more money on food. We see this relationship when we look at data on food expenditure from across the world. In the chart you see food expenditure plotted against total consumer expenditure per person. Total consumer expenditure is any personal expenditure on goods and services. On the y-axis, we have the average amount of money spent on food per person, in countries across the world.{ref}This data comes from the United States Department of Agriculture (USDA) Economic Research Service, which estimates this for countries where available market data is sufficient.{/ref} This measures money spent on food consumed at home – from stores and supermarkets. The source _does not _include food eaten out-of-home, from restaurants and cafes (however, that would be useful data to have). Tobacco and alcoholic beverages are also excluded. On the x-axis, we have a measure of prosperity, total expenditure. Expenditure tells us how much disposable income people have to spend on goods and services such as food, housing, education, health, and leisure activities. It’s important to ensure that we can afford all of the essentials that give us a high and comfortable standard of living. Countries which are poor – and where therefore people’s expenditure is very low – can be found, richer countries are further towards the right. This is shown on a log axis by default, but you can change it to a linear scale on the interactive chart. Both metrics are measured in US dollars per person per year. What we see is a strong positive relationship: where expenditures are high people tend to spend more money on food At expenditures below $5,000, the average person tends to spend less than $1,000 on food. At expenditures above $10,000, it's common for the average to be $2,000 or more per person per year. <Chart url="https://ourworldindata.org/grapher/food-expenditure-vs-gdp"/> ## For richer people, food makes up a smaller share of their expenditure The amount of money spent on food might increase in absolute terms — as we saw in the previous chart — it falls as a share of people’s expenditure. This is what the following chart shows. In the chart, we’ve plotted food spending against total expenditure again, but this time food spending is measured as a percentage of someone’s total expenditure.{ref}Again, this data comes from the United States Department of Agriculture (USDA) Economic Research Service, which estimates this for countries where available market data is sufficient.{/ref} In countries with expenditures below $10,000, it’s common for people to spend a quarter or more on food. As total spending rises, a smaller and smaller share goes toward food. At high expenditures, it’s common for people to spend 10% or less. This is despite the fact that they spend _more_ on food in absolute terms. Both of these points are positive signs for consumers. Spending more on food in dollar terms often means that people are eating more diverse diets. At low incomes, people tend to [rely on cheaper staple crops](https://owid.cloud/grapher/share-of-energy-from-cereals-roots-and-tubers-vs-gdp-per-capita) such as cereals and tubers for most of their calories. As people get richer they can afford other foods such as fruits, vegetables, legumes, meats, and dairy products which have a wider range of micronutrients, protein, and fats. Spending less of our money on food means we have more disposable income for other essentials such as education, healthcare, and housing. <Chart url="https://ourworldindata.org/grapher/food-expenditure-share-gdp"/> ## Engel’s Law: how food spending changes with income That gives us two important insights into food spending. First, richer people tend to spend more money on food in absolute terms. Second, food tends to account for a smaller percentage of their total expenditure. The chart illustrates this relationship: in absolute terms spending on food increases with income (shown in purple), in percentage terms it decreases (shown in green). Combine them and we get a relationship called ‘[Engel’s Law](https://en.wikipedia.org/wiki/Engel%27s_law)’: as household income (and expenditure) increases, the percentage that is spent on food decreases, but the absolute amount spent on food increases. Research has shown that this relationship holds true _within_ countries: studies looking at household expenditures in South Africa and China, for example, found the same pattern.{ref}Mulamba, K. C. (2022). [Relationship between households’ share of food expenditure and income across South African districts: a multilevel regression analysis](https://www.nature.com/articles/s41599-022-01454-4). Humanities and Social Sciences Communications, 9(1), 1-11. Chen, M. (2022). Engel’s law in China: Some new evidence. Review of Development Economics.{/ref} <Image filename="Engelsl-Law-Schematic.png" alt=""/> #### Keep reading at _Our World in Data..._ In a [**related article**](https://ourworldindata.org/diet-affordability), I look at what happens at the bottom of the global income distribution: it’s estimated that around three billion people can’t afford a healthy, diverse diet even when they spend most (or all) of their income on food. We want them to be able to spend more on food so they can have a diversified diet, and we don’t want them to have to spend all of their money to achieve this. ### https://ourworldindata.org/food-prices ### https://ourworldindata.org/diet-affordability | {
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"rendered": "\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>Richer people tend to spend more money on food.</p>\n\n\n\n<p>We see this relationship when we look at data on food expenditure from across the world.</p>\n\n\n\n<p>In the chart you see food expenditure plotted against total consumer expenditure per person. Total consumer expenditure is any personal expenditure on goods and services.</p>\n\n\n\n<p>On the y-axis, we have the average amount of money spent on food per person, in countries across the world.{ref}This data comes from the United States Department of Agriculture (USDA) Economic Research Service, which estimates this for countries where available market data is sufficient.{/ref} This measures money spent on food consumed at home \u2013 from stores and supermarkets. The source <em>does not </em>include food eaten out-of-home, from restaurants and cafes (however, that would be useful data to have). Tobacco and alcoholic beverages are also excluded.</p>\n\n\n\n<p>On the x-axis, we have a measure of prosperity, total expenditure. Expenditure tells us how much disposable income people have to spend on goods and services such as food, housing, education, health, and leisure activities. It\u2019s important to ensure that we can afford all of the essentials that give us a high and comfortable standard of living.</p>\n\n\n\n<p>Countries which are poor \u2013 and where therefore people\u2019s expenditure is very low \u2013 can be found, richer countries are further towards the right. This is shown on a log axis by default, but you can change it to a linear scale on the interactive chart.</p>\n\n\n\n<p>Both metrics are measured in US dollars per person per year.</p>\n\n\n\n<p>What we see is a strong positive relationship: where expenditures are high people tend to spend more money on food</p>\n\n\n\n<p>At expenditures below $5,000, the average person tends to spend less than $1,000 on food. At expenditures above $10,000, it’s common for the average to be $2,000 or more per person per year.</p>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/food-expenditure-vs-gdp\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n</div>\n\n\n\n<h3>For richer people, food makes up a smaller share of their expenditure</h3>\n\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>The amount of money spent on food might increase in absolute terms \u2014 as we saw in the previous chart \u2014 it falls as a share of people\u2019s expenditure. This is what the following chart shows.</p>\n\n\n\n<p>In the chart, we\u2019ve plotted food spending against total expenditure again, but this time food spending is measured as a percentage of someone\u2019s total expenditure.{ref}Again, this data comes from the United States Department of Agriculture (USDA) Economic Research Service, which estimates this for countries where available market data is sufficient.{/ref}</p>\n\n\n\n<p>In countries with expenditures below $10,000, it\u2019s common for people to spend a quarter or more on food.</p>\n\n\n\n<p>As total spending rises, a smaller and smaller share goes toward food. At high expenditures, it\u2019s common for people to spend 10% or less. This is despite the fact that they spend <em>more</em> on food in absolute terms.</p>\n\n\n\n<p>Both of these points are positive signs for consumers. Spending more on food in dollar terms often means that people are eating more diverse diets. At low incomes, people tend to <a href=\"https://owid.cloud/grapher/share-of-energy-from-cereals-roots-and-tubers-vs-gdp-per-capita\">rely on cheaper staple crops</a> such as cereals and tubers for most of their calories. As people get richer they can afford other foods such as fruits, vegetables, legumes, meats, and dairy products which have a wider range of micronutrients, protein, and fats.</p>\n\n\n\n<p>Spending less of our money on food means we have more disposable income for other essentials such as education, healthcare, and housing.</p>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/food-expenditure-share-gdp\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n</div>\n\n\n\n<h3>Engel\u2019s Law: how food spending changes with income</h3>\n\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>That gives us two important insights into food spending.</p>\n\n\n\n<p>First, richer people tend to spend more money on food in absolute terms. Second, food tends to account for a smaller percentage of their total expenditure.</p>\n\n\n\n<p>The chart illustrates this relationship: in absolute terms spending on food increases with income (shown in purple), in percentage terms it decreases (shown in green).</p>\n\n\n\n<p>Combine them and we get a relationship called \u2018<a href=\"https://en.wikipedia.org/wiki/Engel%27s_law\">Engel\u2019s Law</a>\u2019: as household income (and expenditure) increases, the percentage that is spent on food decreases, but the absolute amount spent on food increases. </p>\n\n\n\n<p>Research has shown that this relationship holds true <em>within</em> countries: studies looking at household expenditures in South Africa and China, for example, found the same pattern.{ref}Mulamba, K. C. (2022). <a href=\"https://www.nature.com/articles/s41599-022-01454-4\">Relationship between households\u2019 share of food expenditure and income across South African districts: a multilevel regression analysis</a>. Humanities and Social Sciences Communications, 9(1), 1-11.</p>\n\n\n\n<p>Chen, M. (2022). Engel\u2019s law in China: Some new evidence. Review of Development Economics.{/ref}</p>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"4492\" height=\"3646\" src=\"https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic.png\" alt=\"\" class=\"wp-image-55522\" srcset=\"https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic.png 4492w, https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic-400x325.png 400w, https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic-678x550.png 678w, https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic-150x122.png 150w, https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic-768x623.png 768w, https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic-1536x1247.png 1536w, https://owid.cloud/app/uploads/2023/01/Engelsl-Law-Schematic-2048x1662.png 2048w\" sizes=\"(max-width: 4492px) 100vw, 4492px\" /></figure>\n</div>\n</div>\n\n\n\n<hr class=\"wp-block-separator\"/>\n\n\n\n<h5>Keep reading at <em>Our World in Data…</em></h5>\n\n\n\n<p>In a <a href=\"https://ourworldindata.org/diet-affordability\"><strong>related article</strong></a>, I look at what happens at the bottom of the global income distribution: it\u2019s estimated that around three billion people can\u2019t afford a healthy, diverse diet even when they spend most (or all) of their income on food. We want them to be able to spend more on food so they can have a diversified diet, and we don\u2019t want them to have to spend all of their money to achieve this.</p>\n\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/food-prices</link-url>\n <title></title>\n <content></content>\n <figure></figure>\n </block>\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/diet-affordability</link-url>\n <title></title>\n <content></content>\n <figure></figure>\n </block>",
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