what is engel s law 
engel s law is an economic theory put forth in 1857 by ernst engel a german statistician it states that the percentage of income allocated for food purchases decreases as a household s income rises while the percentage spent on other things such as education and recreation increases understanding engel s lawin the mid 19th century ernst engel published a study based on the expenditures of belgian families he divided them into three groups on relief poor but independent and comfortable he then broke down their expenditures for food clothing housing education recreation and other spending categories 1engel found that the poorer the group the greater the percentage of their budget that went to food while a lesser percentage went for example to clothing and education that finding soon became known as engel s law english translations of engle s law vary slightly but are usually expressed as either the poorer a family the greater the proportion of its total expenditure that must be devoted to the provision of food 2or the poorer is a family the greater is the proportion of the total outgo which must be used for food the proportion of the outgo used for food other things being equal is the best measure of the material standard of living of a population 1engel s insight was extended to whole countries by arguing that the wealthier a nation the smaller the proportion of its labor and capital that will have to go toward food production and the more it can devote to manufacturing and services resulting in a more advanced economy 3engel s law todayengel s law remains a fundamental principle of economics today and underlies many economic and social policies around the world including anti poverty programs in the 20th and 21st centuries expenditure categories have grown to include many things that weren t around in engel s day automobiles health insurance and mobile phones for example but the principle remains the same once families have met their food needs they have money to spend on other things some of which education for example may lead to even greater financial security and affluence example of engel s lawsuppose a family with an annual household income of 50 000 spends 25 of their income on food or 12 500 if their income doubles to 100 000 it is unlikely that they will spend 25 000 25 on food although they may spend somewhat more than they had been spending as the late mit economist paul a samuelson points out in his widely used college textbook economics as income increases expenditures on many food items go up people eat more and eat better they shift away from cheap bulky carbohydrates to more expensive meats and proteins and to milk fruit vegetables and labor saving processed foods there are however limits to the amount of money that people will spend on food when their incomes rise 